Understanding Late Bill Payments and The Credit Bureaus

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There will come a point in time when a bill or two happens to get paid after its due date. Even the most fiscally responsible person may make a mistake and pay a bill late. This can simply come down to forgetting about a due date, as a result to your busy schedule. Perhaps you are dealing with tight times and you downright did not have the funds to make the needed payment. Do you understand the ramifications of making a late payment? Additionally when is a late payment considered “late” in the eyes of the credit bureaus?

What happens when I make a late payment?

The answer to this question is it actually depends. Credit card companies often charge late fees for not paying by the due date. This fee can be a minimum of $25 for the first late payment and can max out at $35 each time following the first offense. But the late fee can not exceed the total amount of debt due. So if you are late on a $20 payment, then your fee can not exceed that same $20. Other companies will likely not do anything at all for paying late. Be sure to check with the specific business entity in regards to their late payment policy.

When is my payment considered late?

Regardless of any penalties incurred as a result of making a late payment, do not worry. The only concern you need to have is with the credit bureaus. The credit bureaus are the end-all be-all in regards to your credit. Therefore, the company you paid late does not matter, even if you had to fork over more money in a particular month than you had anticipated. The credit bureaus consider your payment late only when you are 30 days from the due date or more. Less than 30 days past the due date, you are in the clear. Think of the late payment like a warning to get your act together. However, the real implications come after 30 days past due.

Tips to stop late payment

How do you prevent failing to pay a bill on time? The key is to schedule your payment dates around your pay cycles. Simply call the company in question and request the day you would like to pay your bill. Also, try making your payments automatic. As long as your checkbook is balanced (see post “One Tool That Can Improve Your Finances”) than this should not be an issue, if not work on implementing this habit. Lastly, if you know you may see trouble on the horizon never be afraid to call the specific company and ask for an extension of time to pay. You will be surprised how easy it can be to deal with bill collectors when you are upfront and honest.