Tuesday, April 20, 2010

Keeping Bills Paid On Time

Wow! Sounds like a easy thing to do right? If it was so easy I would not be writing this blog, now would I? Well maybe I still would to address some other point, but the most interesting thing happened to me two days ago. I could not pay my bill when I wanted to. I paid a little bit from last month because there was a serice charge of $1.35, but I could not pay for this month. I tried to call and pay again, but I could not. Turns out the internet providers have a ten day grace period from one bill to the next. In other words, I could not pay online or over the phone for this month even if I wanted to. I had to go in and take one to the hip. (I would rather pay the $2.00 than to damage my FICO score. Let's just put it tht way.) I went in and paid today.

Folks, not matter what fancy trick these companies use, do not let them force you to be late. It will damage your credit. All bills should be paid on time. Cell phone companies do not check credit scores when you sign up, but they will ding your score if you're late. All you need to do is just simply miss one payment and you'll see what I am talking about. But at the same time, do not try to totally automate your payments because they will take the money they need out at their convienance, not yours. This means that you will have to constantly check your account and do more accounting to make up for their ability to tap into your funds. Who knows, company XYZ might overdraw you if you are tight on funds.

The only exception to this rule usually comes from making mortgage payments. You can have those automated and can be sent to your account and then applied to your mortgage. And you can also set the date of withdrawal. This should probably be set to the middle of the month so you have the ability to pay the mortgage off with either payheck you get from your job or business.

Well why is it important to pay bills on time? This goes back to my last article about FICO scores. If you do not pay on time you will take hits left and right to your credit score card. Remember, these days a good credit score is 680-739 and excellent scores is 740 and above. If one wants to go in on real estate, they need a good to excellent standing with FICO. Again, this determines how long you have kept good credit and whether or not you are a good risk for a loan.