Sometimes, life is hectic, and it’s easy to overlook a detail, even when it’s a bill that is due. If you have financial difficulties or are juggling a lot of responsibilities, it can be difficult to make your payments on time.
Keep your credit healthy by paying your bills on time. Late payments can lower your credit scores for up to seven years.
Even if you’ve already missed a payment, it’s not the end of the world. Here’s how to protect your credit health if you missed a payment.
1. Understand How Late Payments Are Reported
Your credit report won’t reflect late payments the day you miss the due date. By moving quickly, you can avoid damaging your credit – or avoid further damage.
At least 30 days late payments are reported to credit bureaus, at which point they have the potential to significantly lower your credit score. In addition, late payments are updated again when they are 60 days and 90 days late. After 120 days, a late payment can be sold to a debt collection agency and further damage your credit score.
Just because your payment is a few days late doesn’t mean that your credit has already been damaged. By paying off the account before the payment is periodically updated, you can avoid any further harm to your credit rating, even if the payment is 30 days (or more) overdue.
2. Pay as Soon as You Can
The longer you go without paying your bill, the more damage it can do to your credit. You can protect your credit by setting up a payment as soon as possible by calling the company or going online. Avoid mailing a check, as the payment can take longer to process and your bill may fall further behind.
3. Call the Company if You Can’t Pay Now
Contact the creditor or service provider if you are unable to make your payment at this time. It is possible to avoid long-term damage to your credit, as well as consequences like late fees and penalty interest rates. Know the answers to these questions before you call:
- Can you pay the bill in full in the near future?
- Are you able to pay a portion of the bill now? Can you pay a reduced amount now and the rest later?
- Are you unable to pay anything now and for the foreseeable future?
Acknowledge that you missed your payment and provide any compelling reasons for not paying. In some cases, the company may let you pay a reduced amount to settle the bill, put you on a repayment plan, or let you temporarily stop making payments without becoming late.
4. Avoid Late Payments in the Future
Your credit score will be best protected if you make all your payments on time. Sometimes you will forget a payment or money is tight. These strategies will help you avoid late payments in the future:
- Sign up for automatic bill payments, which debit your bank account on a predetermined day every month. You won’t miss any payments this way. Nonetheless, this isn’t a good fit if you lack control over your cash flow or if your income is unpredictable.
- You should create a monthly bill payment calendar, listing all the bills you owe and their due dates. Pay your bills on time by setting automated reminders.
- Contact your creditors or service providers if you think you’ll be late on a payment. In that case, they may be more willing to work with you if you contact them before you’re late. This will mean you won’t have to scramble to fix the issue after the fact.
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