Copyright: Marcos Mesa Sam Wordley / ShutterstockIt is not every day that things go as planned in your life. In fact, you may even miss your payments on debts and bills, and this can lead to problems. If you are in this kind of situation, you need to make it a point to settle your bills the quickest way possible. Your goal should include making payments monthly, or perhaps settle the minimum amount required.
While this is a reasonable plan, there are tough times that prevent you from paying off your debts. When emergencies strike, you can have some concerns with your budget. Thus, missing payments can arise, even if you do not intend these to happen.
In the case of a missed payment, what can it do to your credit score? Moreover, is this problem irreversible, and does it mean your credit score is slowly dwindling away?
Remember that a missed payment does not always mean hurting your credit score. There is such a thing as long-term, recurring and first missed payment. The penalties that come with each of these vary. If it is your first time to miss a payment, there is no serious impact on your credit score, which means less stress on your part. However, if it is over 30 days since the payment should have been made, then this is a different story.
Missing Payments
When you think that you are likely to miss a payment, it is important to contact your creditor right away – if this is the first time this could happen. Your creditor may be willing to waive the fee for late payment if there are no histories of late or missed payments.
Also, you should not worry if you have missed the payment for the first time, and you can present your current account prior to hitting 30 days. You can spare yourself from being reported as a delinquent to credit bureaus.
Late Fees and Interest as Penalties
When you pay late, there are fees to think about. These fees will be added to your current balance, and soon, these will accumulate until your debts further increase. It is also possible for your creditor to increase your interest rate even if the payment was only one day late. Rates as penalties can skyrocket up to 39 percent.
Recurring Missed Payments
With payments that are 30 days late, your credit score can seriously be affected. If you have a very high score, then you can expect greater problems because of continued missed payments. This is even more possible with 60-day late payment. So, what you need to do is to slowly pay the debt off instead of just giving up.
If you have missed payments, your relationship with your creditor is affected. What’s more, there is the issue on having a bad credit score, so you will find it difficult to get qualifications for another line of credit in the future.
Act Now
If you fall behind your payments, be sure to do these tips:
– Contact your creditors, as it is worth a try to get flexibility from them.
– Check your credit report on a regular basis to make sure derogatory information is accurate.
– Go through various debt relief options such as a debt settlement program or credit counseling service.
– Set a budget and find out if you have some money left to catch up on your debts.
