Make Paying Bills on Time a Priority in Credit Repair

It is not uncommon for families to be living from one paycheck to another. Especially when money is tight a budget becomes the all-important piece of the money puzzle to ensure the bills get paid and there is food on the table. When you are working through the process of trying to repair bad credit, it is important that a family budget includes a priority list to ensure all bills are paid on time each month. Consumers may think that a few late payments may do no harm but a credit score is highly dependent on consistent payments if it is to be improved.

Making Payments Count

Ideally a budget should be set up so that enough money remains in the bank faithfully to cover monthly expenses. Having a cushion, extra money, in the bank will also help. Automating bill payments is the easiest, most efficient way of making your payment count towards a better score — the way you pay your bills counts for 35% of your credit score make up.  Automated payments are often set up directly through your online banking system or through individual creditors that allow these types of payments. Typically there is no cost for these services and in some cases creditors will even allow for a discount in pricing if you pay electronically each month.

In order to make payments count, not only do you need to pay bills on time, you should also consider how much you are paying. Credit cards especially should be paid in full at the end of each billing cycle or at least more than the minimum required payment should be made. This not only makes you look more truthworthy but it also helps you reduce your debts faster. You’ll end up saving a lot more money too by eliminating debts and paying less interest over time.

When You Can’t Pay On Time

There are some instances where a financial hardship makes it difficult for you to get your payments in on time. In these cases, it is critical you speak directly with your creditor. Explain your financial hardship and work towards different payment arrangements until you can get back to normal. By instigating communication with your creditors, they are more likely to work with you and keep your credit in good standing. If you choose to ignore your creditors and your bill due dates, you are only hurting yourself. Creditors who can not communicate with those who owe them money will have no other choice but to pursue further action like debt collection agencies and lawsuits – both of which can hurt your credit immensely.

Finding the Cash

When it comes to making a budget work, many people living from one paycheck to the next feel they have no ‘extra’ money to go around. However, a good budgeting plan will allow you to remain flexible and find ways to save. A budget brings you a visual of what you are spending and where. Review your budget worksheet for places you can make cuts and find more money to make bill paying easier. For instance, you may need to consider cutting out cable, entertainment, or find ways to lower your current bills. That extra cash can make a nice dent in your current debts, allowing you to save more money in the long run while at the same time improving your bad credit scores.

Remember that bad credit does force you to pay more in a lot of areas. Loans will have higher interest rates, insurance premiums will cost more, and you may even find it harder to get a better paying job. Fixing bad credit should be just as much a priority as establishing a good budgeting plan. With a little effort and consistent work, you can improve your overall financial status within the year.

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