A lot goes into keeping your credit score from tanking. Sometimes it seems as though it’s impossible to keep it from dropping points. But if you constantly check your credit score, you’ll find the many important things that you must do in order to keep it high and impressive to potential creditors. But what happens if you miss a credit card payment? And even worse, what happens if it was innocent and you didn’t mean to?
Your Score Drops
If you miss a credit card payment, your score can be in real jeopardy- especially if you’ve never missed a payment before. A simple late payment to your credit card or loan can result in a drop anywhere from 50 to 100 points! I know that sounds insane, but it’s something that creditors look at with extreme caution if they know nothing else about you but your payment history.
Creditors make money through a couple different means– interest and fees. Late fees are one of the fees that you would want to avoid because when they add up, they can be a pretty penny. Avoid this fee at all costs, because the long-term effects of late payments do no good to your score.
What To Do Now?
What happens when you miss a credit card payment can effect some extremely important credit decisions by creditors like interest rates for a new car, home, or even a new credit card. So tread softly in these waters and try not to make it into a habit, otherwise you can really jeopardize some really important credit opportunities that you may need later on.
If it was a simple mistake or you couldn’t get the funds together to make the payment, be sure to call your credit card company or loan provider and explain what happened. Be honest and let them know that it won’t happen again. During this conversation, ask the representative to get rid of the late fee and the late payment report that’s been recorded or is set to be recorded on your credit report.
Be sure to do this as soon as possible in order to get everything rectified before the creditor sends your late payment information to the credit bureaus. Just be sure to keep in mind that the representative and company owe you nothing (technically you owe them in a literal sense), so be kind but firm when asking. They have the right to deny your request, but it never hurts to fight your case and hope for the best.
2. Set Up Automatic Payments
Once you get the chance, I suggest setting up automatic payments for your credit card and loan bill (especially if the reason behind the missed payment was that you forgot about the bill). It makes life much easier when you know that you don’t have to worry about reminding yourself to send in money by a certain date or to transfer money from one bank to another.
Setting up automatic payments would be the most convenient option in ensuring that you never miss a payment date again. It helps you better track what needs to be paid and when on a continuous loop without ever having to do the manual work again.
The only thing is that you must be very wary when activating automatic payments otherwise you could find yourself in even more of a rut by losing track of due dates and allowing overdraft fees to incur. My suggestion in this case is to be very cautious when allowing automatic payments on your debit card accounts. Ensure that you have the due date written down somewhere and always be expectant of that so that you don’t end up in an even deeper hole than you were before.
3. Take Caution
The best thing that you can do in this case is keep a close watch of your score using one of the 3 main credit bureaus: TransUnion, Equifax, and Experian. My pro-tip would be to use a website called Credit Karma to track your credit.
When you use Credit Karma, you pay no fees because it’s completely free to use and they give you an update once a week of your credit score. They also provide amazing tips and help you understand what you’re doing good or bad that’s effecting your score. They also send emails from time to time notifying you of any sudden spikes in your score so you’re always on the alert. In their application, they show TransUnion and Equifax scores, but you can retrieve your Experian scores separately on www.annualcreditreport.com for free once every 12 months.
Be sure to monitor your credit cards and loans in order for you to be sure that everything is taken care of hastily. If you wait too long to pay your debt off, you can find that your interest rates increase, fees add up, and you’re paying back much more than you’ve actually spent.
Take care of your credit, and your credit will take care of you.