Sometimes life gets in the way and payment due dates get missed. Unfortunately, when a payment is overdue by more than thirty days, this could negatively impact your credit score by as much as 100 points. However, there are some strategies to implement in order to prevent payment delays.
Tips on how to avoid payment delays
Payment delays happen however, setting a clear schedule or routine around these due dates can help avoid them from being missed. Here are some of our top recommendations on how to avoid payment delays.
Add alerts and personal due dates to your calendar
Having personal due dates and alerts in your calendar can help you stay on track with your payment schedule. These reminders will prompt you to plan accordingly on how to make your payments on time. Additionally, by inputting these alerts and due dates, you will be able to help eliminate the possibility of forgetting a payment.
Make a routine out of it
Making a routine out of your account management can also be very useful. You can find a specific day and set aside some time to overview your upcoming payments. Moreover, it is recommended to make this a weekly routine.
This is so you can contribute a weekly amount to an upcoming payment. By making this a routine habit, it will allow you to have more control over your payment schedule. Additionally, MoneyLion has an Early Paycheck option where you can be paid up to two days early. This option can allow you to be proactive in your payment plan by being more in control of your schedule.
Track your expenses
Budgeting is a great way to understand where your money is going. Tracking your expenses and knowing how much to expect to pay at the end of the month, allows you to be more mindful of your spending habits.
More importantly, tracking your expenses can help you set realistic expectations on how much you can spend during a monthly cycle. Utilizing tools that track spending and payments can not only help your financial health but also how to avoid actions that could jeopardize your credit score.
Enroll in automatic payments
By enrolling in automatic payments, you won’t have to worry about forgetting or missing a payment. This option is offered by almost all banks or credit unions. With automatic payments, they will automatically deduct the amount owed from your checking account.
The withdrawal date is additionally set on a specific date. Additionally, this option could be used for both fixed payment amounts, like loans, or those that fluctuate, like credit card balances.
Steps to take if you already missed a payment
Missing payment due date happens, but what steps should you take if you do? Since this does have a negative impact on your credit score, always be proactive and act quickly if you need to resolve this issue.
Pay before the new cycle and communicate with the lender
A late or missed payment won’t affect your credit score until it has been more than thirty days overdue. This time can allow you to be able to come up with the money to resolve this unpaid amount.
However, by missing a payment it may cause a late fee. Moreover, if you know you are going to be late on a payment, by contacting the lender prior may have your late fee waived.
Get in control of your payment schedule
Missing a payment has negative consequences such as affecting your credit score and increasing your loan interest rates. It is important to devise a plan on how to keep on track with your payment schedule in order to avoid these delays.
FAQ
What are the three ways a late payment can affect you financially?
A late payment can impact you financially if the lender charges you a late fee. Also, you may face a penalty that causes your interest rate to increase.
What happens if I’m five days late on my car payment?
Luckily, most lenders give a grace period of about one to two weeks for late payments. However, you are most likely to still be charged a late fee.
How does one late payment affect my credit score?
A 30-day late payment can be noted on your credit report for up to 7 years. A single late payment isn’t likely to decrease your credit score drastically. However, if this is a pattern it can have a large impact on your score.
