Bill Payments

Bill Payments and Credit Scores

There are plenty of good reasons to pay bills; you need a roof over your head, you need electricity, you need auto insurance, etc, etc. One of the best reasons to make your bill payments on time every time is for your credit score.

Your credit score follows you everywhere, much like your Social Security number. There is no escaping a bad score and no denying the benefits of a good score.

When you pay your bills on time, especially credit card bills and loan installments, you build a positive credit history. However, if you miss payments, make late payments, or default on bill payments altogether, your creditors report this activity to the credit bureaus.

Any negative information received by these bureaus will appear on your credit report and significantly lowers your credit rating. It may also impair your chance of receiving credit and loans in the future.

Although it can take several months to increase a credit score with regular bill payments, it can take only a month or two to decrease a score if you don't pay your bills on time. You should always keep this in mind when thinking about skipping a payment or paying a bill past the grace period.

Organizing Bill Payments

To develop a bill paying system, you must first have a clear understanding of what your bills are, when they are due, and the payment options available to you. To get this information, spend one whole month tracking your bills as they come in. Enter each bill into a spreadsheet or some form of budgeting software using an organizational method fitting to your style. Once all of the information has been entered, add up the total amounts due for the entire month. This will give you a good idea of exactly how much money you will have going out vs. coming in.

Next, transfer the entire bill due dates to a calendar or date book. Having each bill’s date tracked on an easy-to reference calendar will decrease your chances of mixing up dates or missing a payment by accident.

Making Payments

Now you have a clear understanding of what you owe and when it is due, next are to determine how you will make the payments. Most creditors try to make the process as convenient as possible by offering several payment options. You can usually find these options on your bill, but if you have any questions, you can always call your creditor directly.

Unless there are special circumstances, you should always choose the payment option that is free of charge. This will help you to avoid paying any unnecessary fees. You may also want to consider choosing to have bill payments automatically withdrawn from one of your bank accounts. That way you can eliminate the chore of writing and mailing checks every month. You can also be confident your bills will always be paid on time.

Another popular option involves paying bills over the Internet. In most cases, making online payments is easy to do and free of charge. It is also completely safe, as most websites are encrypted to ensure personal information cannot be stolen.