Life is hectic and it’s easy to miss details sometimes, even when that detail happens to be a bill coming due. Making your payments on time can be tough when you’re having financial troubles or simply juggling a lot of responsibilities.
It’s important to pay your bills on time to protect your credit health. Late payments can be reported to the credit bureaus, appear on your credit report and negatively impact your credit scores for up to seven years.
If you’ve already missed a payment, all is not lost. Here’s how to protect your credit health when you missed a bill payment.
1. Understand How Late Payments Are Reported
Late payments won’t land on your credit report the day you miss the due date. You can avoid damaging your credit – or avoid further damage – if you move quickly.
Late payments aren’t reported to the credit bureaus until they’re at least 30 days late, at which point they can significantly lower your credit score. After that, the late payments are updated again when they’re 60 days and 90 days late. Once a payment is 120 days late it can be sold to a debt collection agency and damage your credit score even more.
So just because your payment is a few days overdue doesn’t mean your credit is already damaged. And even if the payment is 30 days (or more) overdue, you can avoid further negative impact to your credit by paying it off before the payment is periodically updated.
2. Pay as Soon as You Can
The damage to your credit can increase the longer your bill goes unpaid. To help protect your credit, call the company or go online to set up a payment as soon as you can. If you can avoid it, don’t mail a check as the payment can take longer to process and your bill could fall further behind.
3. Call the Company if You Can’t Pay Now
If you can’t afford your payment at this time, call the creditor or service provider and speak with a representative who can help with your account. You might be able to avoid long-term damage to your credit, as well as consequences such as late fees or penalty interest rates. Before you call, know the answer to the following questions:
- Can you pay the bill in full in the near future?
- How much, if anything, can you pay now? Can you pay a reduced amount now and pay more later?
- Are you unable to pay anything now and for the foreseeable future?
When you call, acknowledge that you missed your payment and offer any compelling reason you have for not paying. 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
Of course, making all your payments on time is the best way to protect your credit. But sometimes money is tight or you simply forget a bill. Use these strategies to avoid late payments in the future:
- Enroll in automatic bill payments, which automatically debit your bank account on a predetermined day every month. This can ensure you never forget a payment. However, this isn’t a good fit if your income is unpredictable or you need greater control over your cash flow.
- Create a monthly bill payment calendar, listing out all the bills you owe and when they’re due. Make sure to set automated reminders to notify you when it’s time to pay your bills.
- Call your creditors or service providers ahead of time if you think you might be late on a payment. They may be more willing to work with you if you contact them before you’re late, and you won’t have to scramble to resolve the issue after the fact.