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Paying Late Doesn't Pay

Do you always pay your bills on time? Or do you hang on to your money as long as possible and pay only on a red reminder or past a due date? If you are one of the latter, then you may not realise that you could be damaging your credit rating. This means that should you wish to apply for credit in the future (maybe a loan, a credit card or even a mortgage), then you run the risk of being charged a higher rate of interest than your contemporaries or could even be refused. And once you have been refused credit by one finance company, it will make it even harder to get credit elsewhere. For example, when Mr A moved into his new flat, he planned to pay his bills by cheque when they arrived. This worked well for a while, but when he changed jobs, the longer hours and socialising that his new role entailed meant he had little free time. The bills began to mount up on the kitchen table and Mr A paid them as and when he made the time, meaning many were well overdue. Three years later when Mr A got married and wanted to move, the knock on effect on was that no one was prepared to give him a mortgage without charging him a higher than the norm interest rate – and that included his mortgage lender at the time. His new wife wasn’t very pleased either, as she’d religiously paid all her bills on time, but found herself ‘tarred with the same brush’. Not a good start to the marriage! If you do make late payments, the amount your credit score will suffer depends on how late and how frequent your delinquencies are. One 30- to 60-day late payment is a lot less damaging than 15 late payments over the last 15 years. It also matters how recently these episodes occurred. A single incident five months ago still counts. A single incident five years ago no longer matters. For example, one late payment in the recent past could lower your score 20 points. (One that's currently late, and still unpaid, could drop it by double that). A pattern of late payments could lower your score by 50 or 60 points. You really can boost your credit score by paying your bills on time – and save money in the long run too (think about Mr A who is still paying more than his mortgage than he could have been!). If you set them up to be paid by direct debit, then it will make life a lot easier for you, too!

SNIPPET! - Don’t throw away vouchers with the junk mail!

If you have a loyalty card with a supermarket, DIY store or similar, no doubt every so often you will receive a leaflet in the post from them detailing their latest special offers etc. I know it looks like junk mail, but do take a few seconds to open it up – you may be pleasantly surprised! Many of these mailings not only include money off vouchers, but some – like Homebase for example – actually include vouchers relating to the points you’ve accrued on your loyalty card as well.

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