The Ultimate Credit Tip

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This key credit tip from AutoCenters probably isn't going to come as much of a surprise, but with tax refunds starting to come in--and Herculaneum and St Louis locals getting excited about what they'll spend it on--it's time for this helpful reminder:

The best way to raise your credit score is to pay everything on time, all of the time.

It's simple, but it's true.

Every on-time payment is like a gold star on your credit report. And every late payment? Is a harsh mark.


Why Do Late Payments Hurt My Score So Much?

While some aspects of your credit score weight rankings can be confusing--like how many accounts to have open at one time--this one is pretty straightforward. Your payment performance is one of the few things related to your credit that you really have control over, so making late payments is directly related to how trustworthy you'll be in the eyes of your next lender.

Obviously, accidents happen and you might miss a payment every now and then. But, keep in mind that payment history (positive or negative) could account for up to 35% or more of your total credit score--and one estimate claims that one 30-day late payment penalty could drop your score as much as 100 points!

But it's not just loans--paying your utility, rent, and phone bills is just as important. And while these payments don't exactly raise your score, missing them can have an impact.


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What Type of Late Payments Hurt You the Most?

Credit card bills, auto loans, mortgages, and student loans are typically looked at the hardest when lenders are reviewing your payment history--because reliable payments on loaned money are a good indicator of future reliable payments. These payments are also the type that are reported, every month, to the three credit bureaus: Equifax, Experian and TransUnion.

Missing payments on these bills can really hurt your credit score, while on-time payments go a long way in raising your score. The more (and later) late payments you have, the more hits your score will take.

Delinquent (late or overdue) payments aren't the worst thing that can be branded onto your credit report, though--after a few months of delinquent payments, lenders/creditors will usually send an account to a collections agency. Having an account in collections is terrible for your credit, and that stays on your report for up to 7 years.


"I Can't Afford to Make My Monthly Bill Payments Because of My Car"

If you're missing payments on any of your bills because what you're paying for your current lease or auto loan is eating up your paychecks, we might be able to help beyond just giving credit tips.

Sometimes drivers buy a great, nice new car when they're on solid financial footing, and then their situation changes and they find themselves over their head with new-car payments they can't afford.

You can bring your vehicle to us, and trade it in for a much more affordable--but still high-quality and comfortable--car, truck, or SUV that's going to help you get back on top of your payments. Our guaranteed 60-second financing program means that you're already approved for financing through AutoCenters. Even if you have bad credit from a few delinquent payments, we can help.

How Can I See Whether I Have Positive or Negative Payment History?

If you can't remember if you're making timely payments, there's a good chance that you've missed some here and there--fortunately, there are ways to check.

The next time you pull your free credit report, you'll be able to see most everything that a future lender will see. Past-due accounts will be marked with a number between 1 and 9--1 is good, everything else indicates a late or delinquent payment.

If you see some numbers you don't like, it's never too late to start a good habit.


How to Pay on Time, All the Time

Back in the fall, we talked about using payment reminders, or--better, if possible--signing up for auto-payments that will simply withdraw the necessary payment from your associated bank account, on the date that it's due. Auto-pay = no more late payments! Even something as simple as a monthly bill-pay checklist can make a huge difference.


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If you're feeling pretty good about paying your bills on time--keep it up!

But, if you're really frustrated with your current credit or payment situation, it may be worth seeking out a credit counselor to help you get back on track.


Categories: Credit Tips