The effect of a late payment on your credit score is based on several factors. Creditors assess late payments depending on three things: how much the missed payment was, how recent it took place and how frequently you miss payments. However, one missed payment could immensely damage your credit score, despite your payment history, and the last thing that you want is to seem like a risky borrower to lenders.
If you skip a bill payment, you can still salvage your credit score. Here’s how:
If your missed payment was a frank mistake, pay your bill as soon as you can
The longer a bill goes unpaid, the more your credit score will be damaged. Depending on the creditor, you could be charged for a late fee mere seconds after the payment was due, and late fees can range anywhere from 25 to 50 dollars.
If you miss a payment on a new credit card with an introductory rate, creditors might end the promotional period and make you pay a higher interest rate. In order to keep your low interest rate on a new card, make sure that your payments are always made on time. If you’ve already forgotten to pay your bill on a new credit card, make your payment as soon as possible and call the creditor to ask if they can forgive your mishap. If they don’t budge and are strict about terminating your promotional rate, ensure that you’re making all future payments on time to avoid dropping your credit score!
If you can’t afford to pay your bill, call your creditor and negotiate
Life’s financial troubles and emergencies can be a contributing factor to whether or not you pay back creditors on time. If you seem to be missing your bill payments regularly, consider how much money you’re paying on accumulated interest rates and added fees. If you can’t afford to pay your bills, call your creditor and explain to them your situation – don’t just ignore your debt.
If it’s been more than 150 days since you paid your bill, creditors might charge off your debt and send it to a collection agency. A collection account on your credit report will have a negative impact on your overall financial history, which is something that you want to avoid at all costs. Your first step is to call your creditor and be honest with them about your financial situation. Your second step is to start putting together a solid savings plan to alleviate personal stress and to prevent missing a payment again. Build a healthy relationship with your creditor and your bank account and the odds of being penalized for a late payment will be low.
A missed bill payment is a common reality. However, the penalties of having to pay additional charges or increased rates is a good enough reason to make all payments on time, every time. This being said, life can be hard sometimes, and although forgetting to pay your bill won’t look good on your credit report, there are steps that you can take to combat any financial hardship. And if you do learn from your mistakes and are looking to build your credit hereon, visit Canada Auto Experts or call 1-855-550-5565 ext. 1115 today!