Make It Better

Some ways to minimize damage to your credit after missing a payment


When it comes to managing money, nobody is perfect. No matter how much you research, no matter how careful you are, you’re bound to make mistakes. The important thing is knowing how to react when you do stumble. One of the more common financial gaffes is missing a payment on a bill. In the grand scheme of things, missing one payment here or there isn’t devastating. However, if you keep missing payments, your credit will take a hit. Here are some ways to minimize the damage to your credit when you’re late on payments.

Pay ASAP. Pay off the past due amount as quickly as possible. As US News reports, if you pay it off within 30 days, it can’t be reported to the credit bureaus. If you pay after 30 days and the missed payment is reported to a bureau, it stays on your credit report for seven years. If you miss a payment by more than 180 days, it could be turned over to a collection agency. Payment history is an important factor in your credit rating (it’s worth about one-third) so being late on payments will hurt it. Keep in mind, paying quickly doesn’t solve all your problems. Creditors can still impose late fees and hike your interest rate.

Contact the creditor. If you pay the balance off quickly, you’ve got a shot at convincing the lender to waive any accompanying late fees. Pick up the phone and give them a call. You might be surprised by how easily (and how many) companies are willing to make amends. After all, they want you to keep paying them down the line.

Work on a reset. Hopefully your late payment doesn’t lead to an interest hike. However, if it does, once you’ve settled down and started nailing the payments again, there’s some good news. If you make six straight monthly payments, the creditor is required to reset any interest hike it might have imposed.

Set reminders. An easy way to make sure you don’t miss payments? Set a reminder for every bill. Better yet, set up automatic payments. The less room there is for a mistake, the less likely mistakes are to happen.

Chris O'Shea

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