Late on Your Bills? Tips on How to Save Money and Your Credit

You’re behind on your bills. It’s not something to be ashamed of. Nearly everyone has forgotten to pay a bill and a lot of people don’t have the money to pay on time. Its okay, there are many ways to work around the “system”.

Many financial institutions are calling shortly after a payment is missed. I’m talking about 3 or more days. This is to their benefit for obvious reasons, but it’s also beneficial to you. They are trying to let you know a payment needs to be made before a late fee is assessed, or even worse, your credit is damaged

Lenders want you to keep good credit, because if banks can’t lend money, they won’t have as many assets (titles to vehicles, deeds of trust etc). An account that’s over 30 days past due at month end hurts a financial institution. Any good banker knows you want to keep your shareholders happy.

There are many kinds of bills you can be late on. Phone bill, utilities, car payment, mortgages…first thing you need to do is find out how far past due you are, and when your service will be disconnected. If it’s a loan or credit card, then ask when your credit will be affected. Lenders report to the credit bureaus at 30, 60, 90, 120, and 150 days past due. So if possible, keep the account under 30 days past due.

There’s a little known fact that most financial institutions only report at the end of the month for loans. So if you aren’t 30 or more days past due on a loan at month end, there is a good chance you will not be reported! This isn’t always the case, but it can help you determine what bills to pay and when to pay them.

As far as phone bills, utilities and cable bills go, you can pay late, but as long as you pay the majority of the past due you can get by, and your credit won’t be affected. Just ask them how much you have to pay, and when you have to pay it by to avoid disconnection. These companies don’t report negative information to the credit bureaus unless you have an account that’s closed due to being past due and gone unpaid. They send the account to a collections agency, which is who actually reports to your credit.

Credit cards can be tricky. Credit cards charge pretty steep late fees, so pay that minimum payment on time if you can. If you can’t, then you need to pay before your cycle date, which is when credit card companies send your account information to the credit bureaus. Your cycle date can be found on your statement.

If you are going to be more than10 days past due on a loan I would suggest requesting a deferral or extension from your lender. It’s hard to get caught up once you get behind. Most lenders will do this if you meet certain requirements, like having a hardship. They might want to collect the interest accrued or a fee, but it’s usually not too bad and will be less than making a full payment. This does not hurt your credit, and will help if you can’t make a payment for a month or two. Also, ask to change your due date! No sense in getting late fees if all that needs to be done is moving your due date up a week or two.

We as consumers have rights, but we also have a responsibility to honor contracts and obligations when we borrow money or retain services. Reading your contract, asking questions and being over all well-informed will help you make smart financial decisions that can help or haunt you for years!

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