Holy cow. I just read an article that reminded me to be terrified …
If you have a 780 credit score, and you make one late payment, your score could plummet as much as 110 points.
That’s right—your score could drop from 780 to 670 in just a month. That could cause your interest rates to shoot through the roof.
Worse, it could cause you to pay a ton in interest payments.
So this week, I want to focus on the nitty-gritty…
I know that administrative housecleaning isn’t fun for anyone, but you cannot afford to put it off.
Take an hour this weekend to get your bill-paying mechanisms in order. Sign up for auto pay, make sure you know when your credit cards are due, and just make sure that you have a system that protects your credit score.
It might sound simple, but forgetting to pay one bill could be devastating.
Of course, even if you have the best systems in place, money might be tight one month. If you do need to pay a bill late, here are a few things to keep in mind:
- Your utility payments are not included in your credit score unless your account is sent to collections. If you have to make a choice between paying a credit card late or a phone bill late, pay the credit card on time and pay the phone bill late. This will keep your credit score intact.
- Most credit card companies do not report a bill as “late” unless it is past due by more than one billing cycle, which is usually about 30 days. So if your credit card is due August 5, it probably will not be reported as late if you pay it before September 4. Of course, you’ll still have to pay a late fee, but at least your credit score won’t be hurt!
- And finally, if you cannot pay a bill on time, don’t hide from the creditor. Just call them up and say, “I’m having a tough month. Could you give me a 60-day grace period to make some adjustments to my finances?” They might say no, but if you have been a great customer, they will probably say yes!
That’s it for this week’s blog. It’s short and sweet, but you have some homework …
Buckle down and spend an hour on the “nitty-gritty” by making sure you have a system in place so you pay your bills on time each month.
And if you have an innovate system for keeping your finances organized, I’d love to hear it. Leave a comment below.
P.S. I’m serious. I really want you to share your ideas below. I’m committed to building a financially savvy community, and we need your help in spreading ideas!
Here’s what I do to keep my finances organized:
- First, I make use of technology to pay all my bills. This means that I have “auto pays” set up for every bill, which includes utilities, credit cards, rent, car payments, and the like.
- Then, I have automatic reminders to review my statements on the 1st and the 15th of every month.
- I put all my “bills to pay” mail into a folder, and I review them every other week. I know this might seem simple, but before I implemented this easy step, I had envelopes scattered everywhere—my car, the kitchen table, and my desk. It made it tough to stay on top of the administrative stuff.