Years ago at one of our lunch break meet ups during school, I had a friend who was very excited about his new credit card. “I only use my credit card for gas. I try to be very careful to keep the balance low that way the total doesn’t get out of hand and I can build up some credit!” “Sounds like a great plan to me” I said “ Yeah its pretty awesome. The late fees are not even that expensive either! It’s a great card!” “Wait…. what?” Little did my friend know that he was actually building himself a record of bad credit, because of one little thing: Paying late.
It is a very simple concept, but sometimes people forget the importance and gravity of paying your credit cards off on time. Referring to our previous discussion on credit, your credit score is affected by two things: reliability and income. I went on a personal hunt to find out the secrets of good credit scores, and what I found surprised me! The secret to great credit isn’t dependent on you having a giant bank account. All it takes is some dedication and consistency.
THE MASTERS OF CREDIT
The people I talked to who have the highest credit scores, are the ones who make it a priority to never ever be late. And I mean EVER. They watch like hawks for their monthly bills, and defend their credit from late fees like a knight guarding their castle! These shining individuals realized long ago that paying their bills on time is an easy way to wealth. However, paying bills on time
is a very simple concept that is VERY HARD to master.
IT IS JUST A LATE FEE, RIGHT?
It is so easy to push our bills to the side, ignore the email till Friday, pretend we dont see them. We do everything we can to procrastinate opening the “black letters of doom”. I myself had a pile of “bills to be paid”, that I keep as far away from as possible. Sadly, this is just what the credit companies want. Every time we are late on a payment, our credit score goes down; sometimes by a very large amount! This applies to ALL bills, not just credit card bills. Being late on your phone bill, rent, and others, can hurt your credit just as much as being late on a credit card bill. Likewise, every time you pay your bill on time, your credit score goes up just a little bit. Each time you pay, you slowly prove that you are a reliable individual who can be trusted.
SOME SIMPLE TRICKS TO KEEP ON TRACK
So what can we do for a simple first step? Well for those of you who are technologically minded, most banks have email reminders that you can sign up for that send you a notice before a bill comes due. The trick, is not to ignore the emails when they do come in (something I am often guilty of). Drag them into a “bill” tab in your email mail, and make it a point to check the tab once every week to keep on top of everything. Likewise, for those who prefer the paper method, make a “bill” box (somewhere out in the open that will keep it in your thoughts), and go through it weekly. Another fantastic option is autopay. You can log into most websites and set up a credit card or bank account for it to automatically withdraw from. Although this is the easiest method for paying bills on time, you still need to check it regularly to be sure that the autopay is working correctly and is paying the correct amount! Although rare, technological errors do occur, and it is up to you to make sure the correct amount is withdrawn each month.
LITTLE STEPS TO A BRIGHTER FUTURE
We will have an entire article dedicated to managing bills in the future, but for this week, let’s make our focus paying bills on time. You may be surprised how such a simple step like email reminders or autopay can make such a big difference!