Sense & Centsibility Blog

Making Late Payments: More Than Just a Late Fee

Have you ever missed a bill payment or made late payments? Most people have at some point, whether it was accidental or on purpose because it wasn't affordable by the due date. While there's a bigger issue if you're constantly making late payments, there is more to be worried about than just a late fee.

Type of BillPayment due

Typically there is no effect on your credit if rent, insurance, and medical bills are late. However, if you stop making payments because they're not affordable, your bill will likely go to collections. This usually happens at 6 months of no payments and it will show up on your credit report as a negative item.

Credit impact

Making late payments on credit cards, your mortgage, and other 'reportable' items will wreak havoc on your credit. There's no way to know exactly how much your credit score will drop. However, payment history is the biggest factor in determining your credit score

"Late" payment

So you've made your payment late, but it's not past the 3o-day mark. While it won't drop your score, it's a dangerous habit to get into. If you wait until the last minute to make your payment and an unexpected expense comes up, you may have to choose one payment over another. And that could cause you to be more than 30 days late and getting charged late fees. 

In order to maintain good credit or improve your credit, it's important to stick to due dates and avoid late payments that come with it.

Plus, finding yourself perpetually behind on payments is a stressful habit that once you start can be hard to stop; be proactive to avoid this vicious cycle.

If you're trying to pay down credit cards, a Debt Management Plan may be a better option. It will help you pay down debt faster than making minimum payments and save you money. Call us at 888.577.2227 for your free financial counseling session to see if the DMP is right for you or GET STARTED ONLINE.

Author Elaina Johannessen is a Program Director with LSS Financial Counseling.