Giving credit advice can be difficult when people are facing a challenging economy. Often, we are focused on issues at the same time, and it can become almost impossible to keep basic practices in sight. When it comes to maintaining your credit, here is one basic practice that can keep your credit from crashing. Pay the bills which show on your credit report on time and at bare minimum, never let them reach 30 days late.
The important principle here is that paying your obligation late may incur a late fee from your lender, but it is not reported as late to the credit bureaus at this point. If you neglect to pay the required payment a full 30 days after that, then it gets reported to the three major bureaus and damages your credit score. Avoid this happening at all costs!
We make this distinction because it is important to understand that if your credit is not maintained, you rob yourself of the options that can keep you afloat. Options such as getting a short-term loan or hardship payment plans are generally available only to those who the banks deem worthy to help; people who had been paying on time prior to needing help. Additionally, not paying your bills on time can cause other damage, such as an increase in interest rates and insurance rates, create challenges for property rental, or even cause you to miss out on a job opportunity.
In this volatile market, companies do not want to take a chance on someone who looks risky. And if they do, they will charge them high rates or ask for significant deposits. Take measures now to start paying your bills on time. Also take the time to learn about your credit scores and what impacts them. One credit score that is the industry standard, and it is the score you need to get familiar with. The FICO® scoring system is what the majority of all major lenders use to determine if they will approve your credit application. Make sure you understand that 100 percent of the factors are impacting your score.
You cannot stop at simply paying your bills on time and think that this means you will have great credit scores.
We understand that some people will fall behind on payments due to a loss of income. Other options such as debt consolidation or even bankruptcy exist and may need to be considered when one is financially overwhelmed. There is no shame in doing what is necessary to survive during challenging times.
The bottom line is that although you are a greater risk, many companies have figured out ways to make millions from your bad credit.
