Late Payments and How They Affect Your Credit

If you are these people who are always making late payments for reasons that are controllable, then you should know that there are disadvantages that you might not know about. Aside from the fact that it will reflect on how you handle your personal finances, these are the other disadvantages of making late payments.

Additional Charges

If you are not used to reading your sills, you should start doing so now. Most credit card companies, for example, charge late payment fees from one to nine percent of your total amount due. If you add up a year of late payments, then that is a reasonable amount of money. You should stop the habit of making late payments if you do not want to waste any more of your hard-earned money. You would be surprised at how much you will end up saving in the end.

Bad Effects on Credit Score

Many people think that late payments are not serious matters since they are still paying their bills. It is sad to say that this is not the case. Most late payments are recorded in your payment history and come up every time you are reviewed for adjustments in credit limit or interest rates. If you have the bait of making late payments all the time, this should actually cost you negative credit points. Nowadays, required credit scores vary depending on the financial institution. For example, applying for a housing loan would require you to have a minimum credit score of 700. You will be surprised at how many points you can lose each time you make late payments.

No More Privileges

Late payment records will always be there every time you ask for certain privileges from your creditor. If they see that you are having difficulties paying on time, they would assume that you can not handle more responsibilities. Of course, you will be considered as medium to high risk when your credit report reflects too many late payment entries. Poor credit score will mean a lot of inconveniences for you especially for transactions that require you to have evidence of financial credibility.

If you want to avoid all these disadvantages, than start changing the way you handle your finances. You should think of an effective way that you can manage your bills payment in order to avoid late payments in the future. There are actually several effective ways such as auto-debit payment facilities and online bills payment. You can even ask a friend or partner to do the actual bill payment for you if you only have enough time to write out the checks.

Source by Frank Bruno

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