Minimum Payments: Missing Them Can Spell Doom
Minimum payments are the cornerstone of debt management. Failing to make it for any of your obligations can have substantial long-term effects.
Paying off long-term obligations by making minimum payments could take as long as 40 years. However, it is important that you set enough money aside each month to cover them. Not doing so could hurt your credit.
The bad thing about this option is if you are late on a payment, you will be burdened by late fees and increased interest rates. If you maintain your minimum payment on or before the due date, your credit score will not be hit. The shorten the amount of time you’ll be paying off the debt, try and pay more than the minimum whenever you can.
If you can pay more than the minimum payment, consider paying off the high-interest rate debts first. However, if you can not pay at least your minimum payment then you should look at your expenses and see where you can cut back. If that does not work, you should look into debt relief options.
The impact of a late pay or a missed payment on your credit scores varies significantly depending on individual consumers circumstances. Some of the determining factors on how a late payment will impact your score are:
Do you have a history of delinquencies or collections?
Do you have a history of delinquencies or collections?
Do you have any adverse legal issue on your credit report?
What is the balance on the delinquent account?
What is the length of your credit history?
The best way to avoid late payments and fees that go along with them is to be very organized and meticulous when it comes to paying your bills on time.
All debt relief options need to begin with a budget and a disciplined plan.