5 Possible Benefits of Changing Your Bills’ Due Dates

benefits-of-changing-your-bills'-due-dates

Paying bills is a tedious necessity, and for many, it’s also an ongoing source of stress. According to the 8th annual Billing Household Study from Fiserv, a financial services provider, 35% of consumers paid at least one bill late in the past 12 months, and 65% also paid a late fee.

So, why are these people struggling to meet their billing deadlines? Common reasons include forgetfulness, lack of funds and personal life obligations. If any of these reasons sound familiar, it might be a good idea to consider how your billing due dates factor into the equation. These are five ways requesting a timeline shift from your providers could could really benefit you.

1. Saving Money

Late fees are the immediate consequence of missed payments, but the financial woes don’t stop there. Frequent missteps can lead to increased interest rates on your revolving accounts (like credit cards), driving up your balances and making it more difficult to get out of debt. Paying your bills on time can help you avoid these issues and ultimately save money.

2. Promoting Credit Health

Payment history is the greatest factor considered in credit scoring, and you can’t afford to ignore the effects of late payments. According to Equifax — one of the three major credit bureaus in the U.S. — even a 30-day late payment can damage your credit significantly. In contrast, paying your bills on time can help give you a strong payment history and benefit your credit. Not only that, but keeping your debt level low in relation to your overall credit limit (also known as credit utilization) can benefit your credit scores. Experts recommend keeping your debt below at least 30% (ideally 10%) of your total available credit, which can be hard to do if you’re tacking on late fees. (You can see how your credit is currently fairing by viewing two of your credit scores for free, updated every 14 days, on Credit.com.)

3. Removing Memory from the Equation

According to a 2013 Citigroup survey, 61% of people miss bill payments due to forgetfulness. Coordinating your payments to fall on the same days each month — the 1st and 15th for example — gives you a better chance of remembering your financial commitments. If you still fear memory troubles, it might be a good idea to sign up for bill auto-pay to remove human error from the equation. Most credit and service providers offer this option for free, but you’ll want to check with your individual provider to be sure.

4. Streamlining the Payment Process

Fiserv’s survey found that consumers pay bills using a variety of methods and doing so could contribute to making it hard to keep track of all your bills and their due dates. According to Fiserv:

  • Consumers used six different payment methods per month in 2015, up from 2.9 methods in 2014.
  • A reported 21 million households changed their bill payment method on a monthly basis in 2015, a 40% increase from the previous year.
  • Of those who participated in the study, 21% still receive all paper bills, while 54% use a mixture of paper and online/mobile options — 25% consider themselves paperless consumers.

By changing your billing due dates, you may also feel inspired to commit to a consistent method of payment. Doing so could help you track spending and streamline your monthly finances, helping you keep those bills paid on time (and those credit scores in great shape).

5. Preserving Credit Repair

This may not apply to everyone, but to those it does, it’s a big one. Recovering from past credit damage is an extreme challenge, but that’s especially true if you don’t change the behaviors that contributed to the downfall of your scores. In fact, preserving your scores could be more difficult as it improves. Typically, a single late payment made a few years ago won’t still be hurting your credit today, as long as you rebounded and have made consistently timely payments. Of course, on the other hand, a recent late payment could drop your scores.

How to Change Due Dates

Changing your billing due dates can usually be done with a simple request, which can be done online, on the phone phone or in person. Although credit and service providers aren’t legally required to make this type of shift, explaining your reasons and commitment to timely payments could work in your favor.

Image: shironosov

The post 5 Possible Benefits of Changing Your Bills’ Due Dates appeared first on Credit.com.

How Charging Lunch Every Day Can Help Your Credit Score

charging-lunch-helps-credit-scores

It’s easy to take out your plastic to pay for a meal, especially when you’ve run out to grab a quick bite during the workday. Not only is it convenient, but putting your lunch on credit every day can actually help you improve your credit.

Kind of seems counter-intuitive, doesn’t it?

But it’s possible — you just have to do it right. So, here’s how your daily stop at the local deli can help you build your credit score (and ultimately help you qualify for better terms and conditions on future loans or lines of credit).

1. Maintain a Good Payment History

When it comes to your credit scores, lenders want to know how you’ve managed credit in the past to help them predict how you will do so in the future. They don’t know that you’ve responsibly paid off credit card charges of sandwiches and chips instead of a rare collection of Tolstoy tomes — they just want to know that you’ve done it. In other words, it doesn’t matter what you’re charging so long as you’re doing so responsibly.

That means paying off your credit card bill on time — and ideally in full (more on that in a minute) — each month without fail to display a strong payment history. This factor makes up about 35% of your credit scores, making it the biggest influencer.

2. Don’t Overdo Your Debt Usage

How much debt you have in relation to your credit limit (commonly referred to as your “credit utilization”) is the second largest influencer of your credit scores — making up 30%. So, where is the utilization sweet spot? Credit experts say the general rule is to keep the amount of debt you owe on your credit cards below at least 30% and ideally 10% of your overall available credit. This is important to keep in mind as you review your credit card statements and create your spending budget each month.

If you are riddled with credit card debt, you may want to consider using a credit card payoff calculator tool like this one and eliminating those balances before adding to them with lunch charges. This tool can help you figure out how long it could take you to get out of debt, as doing so can help improve your credit utilization (and ultimately your credit scores).

Keep in mind, issuers tend to report balances to the credit bureaus as of your statement’s closing or billing date, not your actual due date. So you may want to consider paying off your lunch charges each week (or even every day) via a linked checking account to preclude them from adding to the balance that shows up on your credit report.

3. Keep an Eye on Your Credit

If you’re using that plastic to buy your mid-day meals, you don’t want it to get out of control. Spending just $10 for lunch each workday can add up to $2,600 annually. (If this is out of your budget, you may want to consider these 11 easy, tasty lunches under $2.) Plus, aside from any credit score ramifications, it’s a good idea to avoid paying interest on sandwiches you’ve charged.

Remember, as repeatedly mentioned, charging lunch can only help your credit if it’s done so responsibly. To find out how your credit card use is affecting your credit, you can see two of your credit scores for free, updated each month, on Credit.com or view your free annual credit reports each year at AnnualCreditReport.com.

More on Credit Reports & Credit Scores:

Image: Steve Debenport

The post How Charging Lunch Every Day Can Help Your Credit Score appeared first on Credit.com.

4 Reasons Your Credit Score Isn’t Improving

credit-score-isn't-improving

We hear it from readers constantly: I’m paying all my bills on time, so why isn’t my credit score going up?

This feeling that you’re doing everything right and not getting rewarded for it is one of the most frustrating things about credit scores. And the simplest answer to that question is almost as frustrating: It depends.

First of all, credit scores are the result of complicated formulas, so that makes it difficult for the average person (even personal finance writers) to pinpoint exactly why your score is the way it is. On top of that, there are dozens of credit scoring formulas, and you can’t keep track of all of them. Finally, and here’s the really important part, everyone’s credit history is unique. Without looking at your credit report, a credit expert can’t say exactly why your score isn’t changing.

In general terms, there are a few things that could be causing your credit score to stagnate. Here are four of them.

1. Your Credit Card Balances Are Too High

Payment history has the greatest impact on your credit scores, but making on-time payments alone won’t give you a good credit score. It’s certainly important, given how much a late payment can hurt your credit score (it can knock about 100 points off your score, depending on what else is in your credit history), but there are four other major factors that affect your score. The next-most important (after payment history) is your amount of debt.

The key is to keep your revolving credit balances (like credit card balances) as low as possible. This relates to credit utilization: Your revolving credit accounts generally have limits, and the closer your credit balances are to those limits, the higher your utilization. High utilization, in which your debt is more than 30% of your available credit limit, will keep your credit scores down.

“I think it’s common for a high credit card balance to keep scores [stagnant and low],” Jeff Richardson, a spokesman for VantageScore Solutions, said in an email. “Consumers will and should expect their scores to increase as a delinquency gets older and older, but if they still have a high utilization, it’s certainly possible that the score can only rise so much until they pay down the balances on their card(s).”

2. Something Seriously Negative in Your Past Is Dragging You Down

Perhaps you’re paying debts on time and keeping your credit utilization low. In that case, you may want to look at other aspects of your credit history. If there’s something exceptionally negative in your credit history, like a bankruptcy or foreclosure, it can take many years for your score to recover. Most negative information can remain on your credit reports for up to 7 years, so while you wait for the effect to lessen over time, it can help to focus on what you can control: making payments on time and keeping your credit utilization low.

3. You’re Missing Something Important

Though they are the most influential factors in your credit score, on-time payments and credit utilization are not the only things that determine it. How often you apply for new credit, the length of your credit history and the mix of accounts in your file also play an important role in credit scoring.

There’s not much you can do about your length of credit history other than exercising a lot of patience. The longer you’ve been an active credit user, the better your score will theoretically be, but there’s nothing you can do to speed up time. One of the best tips on this topic is to keep your oldest credit account open, because your credit age is an average of your accounts’ ages. You may have a good reason for closing an old account, but it’s a decision you shouldn’t make lightly.

As far as mix of accounts goes, you would ideally have active installment and revolving accounts to show that you’re capable of responsibly managing different kinds of credit. Sure, you may be doing a fantastic job paying your credit cards on time and keeping their balances low, but without any active installment loans, that’s only going to do so much for your credit.

Staying on top of just one credit account can be challenging, although doing that well can give you a great score. Mix of accounts is a small part of what determines your credit scores, so opening up a new credit account solely for the sake of your credit score doesn’t usually make much sense, especially if you can’t manage it and wind up in debt.

4. There Are Errors on Your Credit Report

When’s the last time you checked your free annual credit reports? It’s a smart thing to do regularly, as you can spot errors that could be keeping your credit score lower than it should be. If you find an error on your credit report — that can be anything as little as a misspelled name or as problematic as a wrongful late-payment notation — you can dispute it with each of the credit bureaus reporting the wrong information.

If you find several problems or are overwhelmed by the task of trying to fix your credit, you can hire professionals to help out. Keep in mind, anything a credit repair company does, you can do yourself for free. Also, make sure to research any companies you’re considering. A legitimate credit repair company will not promise a specific jump in your credit score, which is illegal. (You can learn more about how credit repair works here.)

It’s also a good idea to check your credit scores regularly. You can see two for free, updated each month, on Credit.com. Viewing these can help you track changes in your credit scores and let you know if and how you should adjust your behaviors to build good credit.

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Credit Reports & Credit Scores:

Image: Squaredpixels

The post 4 Reasons Your Credit Score Isn’t Improving appeared first on Credit.com.