The three major credit bureaus take several factors into account when determining your credit scores. But there is one factor that has the most impact: whether or not you pay your bills on time. In fact, payment history makes up 35% of your FICO score. Even a single late payment can cause your score to drop, so it’s essential to pay your bills on time, every month. Imagine seeing negative entries on your credit report, just because you forgot to pay a bill or two on time — UGH! Review these tips to help you make sure you’re always paying your bills on time.
Set Up Autopay
The easiest, most efficient way to ensure you pay your bills on time every month is to set them up on auto-pay. Set-up is usually quick and easy, and once it’s complete, you won’t have to ever worry about paying bills on time again.
For credit cards, you can set up your bills to pay the minimum balance, statement balance, or a set amount every month. With utilities, the utility company will debit the full amount of your bill (look into equalizer payment plans to avoid seasonal spikes). You’ll want to make sure you have enough money in your bank account to cover those debits when they hit. If you don’t, you’ll end up with overdraft fees and potential late payment fees from the creditor if the payment doesn’t go through.
Set Calendar Reminders
If you’re not comfortable setting up auto-pay due to inconsistent income, setting electronic calendar reminders for yourself to pay bills is another way to be sure you pay them on time. Be sure to set them up at least 5 days before the payment date. Due to time zone differences, sometimes payments will count as late even if you pay them later in the day on the due date.
Adjust Your Due Dates
If you struggle to pay bills on time because the due dates don’t mesh with pay days, you may be able to change the due dates, so they better align with your cash flow. Some creditors are happy to adjust your due dates, particularly if it means you will pay on time. Rather than trying to arrange this online, you’ll want to call the creditor’s customer service and ask a rep if changing your due date is an option. If the change is approved, be sure to confirm when the new due date takes effect, so you don’t miss a payment.
Sign Up for Payment Reminders
Most creditors offer payment reminders via email and/or text. Signing up for these reminders is one more way you can stay on track and pay your bills on time.
Consider a Debt Management Plan
If you’re serious about getting out of credit card debt and would like to combine all your payments into a single monthly payment, consider a debt management plan. Offered by nonprofit agencies like Take Charge America, debt management plans allow consumers to pay reduced interest rates, which means more of the monthly payment goes toward the principal and debts are paid in full more quickly. Plus, provided you make your DMP payment on time, all your credit card bills will be paid on time, every month. Find out if it’s an option for you by completing our confidential financial review.
