Payments slip our minds sometimes. It happens! Unfortunately, even one late credit card payment can have a negative affect on your overall credit score.
Let’s explore why on-time payments are important, and what you can do to start repairing your score.
How can I avoid late payments?
The best way to deal with late payments is to avoid them from the start. Luckily, there are several ways to do exactly that:
- Turn on autopay.
- Turning on autopay ensures that your payment will be made on time each month. Of course, this also means you need to have enough money in your account to cover the payment so you don’t get slapped with overdraft fees. Even so, this is a simple way to make payments simpler.
- Turn on email and text notifications.
- Most creditors offer text and email reminders to notify you of upcoming payments. If you aren’t comfortable setting up autopay, this is a great alternative to ensure your payment date doesn’t accidentally slip by.
- Select a payment date that works best for you.
- Most credit cards allow you to pick your due date. If you struggle with spending throughout the month, consider choosing a due date a day or two after you receive your paycheck. This ensures that your payment will be made when you have fresh funds in hand.
When is a payment considered late?
Once a payment is 30 days overdue, creditors are legally permitted to report it to credit bureaus. While one missed payment may not sound like a big deal, it can have a big impact on your credit score – as much as a 100 point drop! Since on-time payments are the single most important factor of your credit score, it’s important to do everything you can to make sure that you never miss a payment.
What should I do if I do miss a payment?
If you’re less than 30 days late on your payment, make a full payment as soon as possible. While you may get stuck with a late fee or see an increase in your APR, your creditor will not have reported your late payment to credit reporting bureaus yet. By paying before you are 30 days late, you can save your credit score from taking a major hit.
If you’re more than 30 days late on your payment, make a payment as soon as you can. The less time you allow to pass before making your payment, the less of a hit your credit score will take. The longer you wait, the worse it gets. Make sure that you are paying the full amount of your minimum payment due. Partial payments are not taken into consideration by creditors, and won’t prevent them from reporting you to credit bureaus or collections.
What if I can’t make my minimum payment?
Juggling multiple due dates, credit cards, and minimum payments can be stressful. A personal loan is a great way to simplify by consolidating your debt. Instead of having to manage multiple payments and due dates across several cards, you make one set payment each month. You always know when your payment is due and how much it will be, which makes it easier to plan your monthly budget.