Times are tough!
Income is down, expenses are up and cash flow is tight.
It’s very tempting to skip out on a debt payment or a credit card bill to help free up the cash flow a bit, but are you sure you realize the impact that decision will have on your credit score?
The Spend on Life team had a great post and graphic the other day that showed how your credit score drops significantly the longer you go without making a payment – so make sure you are staying current with your bills!
In other words, Don’t Flush Your Credit Down the Drain!
SpendOnLife.com is an online resource dedicated to helping consumers achieve healthy credit. Credit ratings are extremely important for qualifying for low interest rates on new loans and lines of credit.
SpendOnLife.com provides you with up-to-date, accurate information and advice about credit reports and scoring. Check ‘em out.
What Should You Do If You Can’t Pay Your Bills?
Every situation is different, but here are a few tips to help:
- Call your creditor – make them aware of your situation - many times they can work out a plan with you.
- Pay something – Even though you can’t pay the whole bill, paying anything shows the creditor you are committed to paying your debt.
- Seek help – There are some reputable places and agencies that can help you, just be careful.
- Commit to getting out of debt – Yes it’s painful for a while, but in order to get out of this mess you have to stop spending.
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{ 8 comments… read them below or add one }
I skipped a payment once in my life and the impact of the double interest add on the following month was worse than I expected.
We have one card with a balance and get the skip a payment offer every month. We never take advantage of it. Better to make minimum payments than to skip.
I had no idea the skip could affect your credit score though.
.-= Kevin@OutOfYourRut´s last blog ..Will A Million Dollars be Enough to Retire On? =-.
Increased interest is no joke! I ran some numbers and a $3,000 loan at 15% and paying only the minimum ($75 or 2.5%) would take a little over 13 years to pay off!
Change that interest to 28% and it would take 57 years!
The math is simplified because it doesn’t account for late fees or the fact that under the Credit CARD Act of 2009 after 6 months of on time consecutive payments the interest rate will be lower again.
But the point is clear….missing payments should be avoided at ALL costs!
Missing a payment is one of the worst things you can do. Too often people think that everything will be okay as long as they make a payment next month. This is disastrous for your credit.
.-= TheDebtHawk.com´s last blog ..CD Ladder – How To Build A CD Ladder =-.
@Lakita – you would be amazed at how many people die and leave debts to their family because they never got arounbd to paying their credit card debt.
Great read. I always pay mine off. I went to pay my bill online a few months ago and the payment date was not for two months. I paid the balance off before the normal due date. Had I not done this I would have had to pay a pile of interest.
.-= Daddy Paul´s last blog ..Exchange traded fund strategies =-.
Kevin, glad to hear that first skip made you realize the devastating impact on your debt situation! It’s funny how the card companies would love for you to take advantage of those offers. Who’s interest do they have in mind? Hmmm!
.-= Jason´s last blog ..This Week in Personal Finance – January 15, 2010 =-.
Lakita – that’s only a $3,000 balance too. The average consumer is somewhere around $8 or $9k! It’s no wonder folks feel they can never get ahead sometimes.
Daddy Paul, sounds like a little trick the company did to try to sneak in some interest profit!?
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