When it comes to protecting and improving your credit score, one simple move can help you.
While many credit mistakes are due to unexpected circumstances, many are results of poor planning, lack of organization or lack of attention to detail.
That is where the concept of automatic payments comes in.
Nothing is more important than making on time payments to improve your credit score. In fact, 35% of credit score relies on your track record for making on-time payments. According to myFICO, paying a bill more than 30 days late can potentially drop your credit score by 100 points or more.
The days are gone when most people paid, their credit card bills by writing a check, and mailing it. Now banks make it easier to “set it and forget it” with your credit card bill payments. You just need to activate a one-time setup, and your bill will be paid every month. Note: You must make sure that you have enough money in your account to clear the payment! To monitor your credit score, United Financial Counselors advises their clients to check United.procredit.com. This site helps you monitor any changes or credit activity as well as provide you personal score explanations.
Here’s is what you should know about automatic payments.
You can decide how much to pay:
Most credit card issuers give you several options when it comes to your card payment each month. You can choose to pay the full balance or you can just pay the minimum amount. You can also designate a specific dollar amount, regardless of what you owe, to pay each month. Do note that before choosing any of the above options, make sure that you know the interest amounts and deadlines so that the interest will not accrue on your account.
You can decide when to pay:
All card issuers allow their cardholders to choose exactly how many days before their payments are due that they can pay their bill. It would be best to aim 5 to 7 days prior to your due date to pay your bill. The reason for this advance payment is that mistakes do happen and technological issues may arise. Payments can be delayed past the designated due date so it is best to allow your payment sufficient time to reach its destination.
You can decide your payment portal:
The best and easiest way to pay your bill would be to set up automatic payments through your card issuer’s website. You can directly link your checking account or any other type of account to your credit card issuer’s payment portal. Next, you choose how much you pay each month and then, when you would like to pay. This allows your issue to pull the funds from your account each month for the amount and on the day you specify.
You should still be flexible:
One positive about automatic payments is that they are flexible.
At any time in a given month, if you find yourself with additional money and want to put that money toward paying your credit card debt, you should. Also, if you get a pay raise or new higher-paying job, and you can now afford to pay more each month, you can adjust your autoplay settings option accordingly.
Trust but verify:
Automatic payments are helpful, but they aren’t perfect. You should check each month that your bill payments are paid on time, to the right recipient, and in the right amount. After all, no one is responsible for your for money but you so be alert when managing it and utilize these tips and tricks when managing your auto payments.
Make like simple- Automate!
Should you have questions or want more information about financial or budgeting assistance, please visit or website UnitedCounselors.org or contact us at 954-372-4370.