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How to Avoid Late Payments and Improve Your Credit Score

Everyone has months where payments are more challenging to afford than others. However, late payments can significantly impact your credit score and make it difficult to qualify for credit and favorable interest rates in the future. Even one 30-day late payment can hurt your credit scores since your payment history is the most influential factor in calculating those scores.

Thankfully, a little planning and strategizing can go a long way toward making sure you never miss a payment due date. Here are six ways to avoid late payments on your credit report.

1. Adjust Your Budget

Having a detailed budget that tracks your monthly spending can help you take stock of your income and bill obligations. While it may seem overwhelming to start a budget, it doesn’t have to be overly complicated. Track your bills and spending, and take steps to ensure you have enough income to cover your monthly expenses (and ideally put some money toward savings).

Make sure your budget lists what bills you need to pay, how much you owe, and when payments are due. If there’s little or no room in your budget after paying your bills, you may want to reduce your spending or find ways to earn more income until you can bring your monthly spending below what you bring in each month and ensure you have enough to make all your payments on time.

2. Set Up Autopay

Enrolling in autopay is one of the easiest ways to prevent a late payment. When life gets busy, you can rest easy knowing that your payments are scheduled to go through on time. You’ll just need to make sure you have the funds in your account to cover each transaction. In some cases, autopay can even save you money, as many lenders offer autopay discounts. For instance, student loans and car loans may knock off 0.25% of the interest rate when you enroll in automatic payments.

3. Set Alerts and Reminders

Having due dates included in your budget can help you stay on top of bills, but reminders can help make sure you never forget to pay a bill. Nearly all banks and budgeting apps allow you to set up alerts and reminders of upcoming bill deadlines. It’s a good idea to schedule reminders a few days before bills are due to give yourself time to review them and verify you have the funds to cover them.

4. Prioritize Your Payments

If you’re tight on cash, you may need to prioritize which debt you should pay first. While not a fast rule, it’s usually wise to pay credit-impacting bills like your credit card and loans before less essential ones like streaming services and gym memberships. Of course, you’ll also need to focus on urgent bills, like an impending electric bill to keep the lights on. In any case, the goal is to ensure you can pay all of your bills each month: Even bills that don’t affect your credit directly could cause your credit score to plunge if they’re sent to collections for nonpayment.

5. Build a Flexible Payment Schedule

Making some adjustments to your due dates and payment schedules can make it easier to make payments on time. For example, you might want to schedule bill payments a few days after payday. This way, you can take care of your bills before funds are used elsewhere.

Many creditors allow you to pick your own due date, which could help you spread out payments over the month and make it easier to manage your budget. Alternatively, if you get paid only once a month, consider arranging all your due dates to fall shortly after payday.

6. Review Your Finances Regularly

It’s difficult to know where you’re at financially—and whether you’ll be able to pay your bills each month—if you don’t know how much money you’ve got on hand.

Set aside time at least once a week to review your financial position, including upcoming payments, balances in your accounts, discretionary spending, and more. Regular financial reviews will help you see potential red flags before they become a bigger issue, allowing you to move money from one account to another, quickly make some extra cash, or reach out to your creditor and make alternative arrangements before you risk a payment being late.

Contact O1ne Mortgage for Your Mortgage Needs

At O1ne Mortgage, we understand the importance of maintaining a good credit score and managing your finances effectively. If you need assistance with your mortgage or have any questions about our services, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you navigate your financial journey and ensure you get the best mortgage solutions tailored to your needs.

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