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We often take paying bills for granted. We routinely do it
and not think much about it. We sometimes are not even
concerned if we pay bills late. But there are some
potential major benefits of paying your bills on time. Here
are a few of the important ones:
Improved Credit Score (or FICO)
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Simply stated, every time you apply for a loan, mortgage
or maybe even insurance, the institution to which you are
applying will check your credit rating and credit score.
The credit score (or FICO) is just as important as your
credit rating. This FICO is a score which can range from
300 to 800 (or more, depending upon who you believe.) The
higher your score, the better the rates you will get.
The score is based upon a number of things in your credit
history, like the amount of money you owe, types of credit
you have and how well your bills are paid on time. In fact,
your payment history could possibly account for 35% of your
score.
So, paying bills on time helps your FICO, which will in
turn help get lower rates on mortgages, loans and sometimes
even auto insurance.
Improves Chances of Owning a Home
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As already mentioned, your FICO score plays a big part in
determining credit worthiness on mortgages, but more
mortgage lenders are looking closely at you bill paying
history, and, in some cases ranking the importance of your
bill paying history higher than your FICO score in the
mortgage approval process.
As with many things, there are always exceptions to the
rules, but mortgage lenders are being more thorough, and
sometimes stricter, in their approval process. So if you
don't own a home yet, and desire to, keep those rent, car
and other loan payments paid on time.
Maintain Low Interest Rates on Credit Cards
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Everyday we get bombarded with new credit card offers for
transferring the balance from a higher interest rate credit
card to a lower one. Many of these offers give
fantastically low interest rates but you need to be aware
of the fine print. Some contracts state that if you miss,
or are late with, one payment, your 'introductory rate',
which may be 1.9% or 2.9% or 4.9% may jump to almost 20 or
24%.
While the fine print of the contract gives the credit card
company some leeway in when they will raise your interest
rate, whether it be after one or two late payments, you can
rest assured that it will go up if you have a couple of
late payments.
Eliminate Late Fees and Finance Charges on Credit Cards
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We have all missed a credit card payment or two in our
lifetime and have paid 'through the nose' for it. It seems
like the going rate for late fees is $29. On some credit
cards, depending on your balance, a late fee could go as
high as $35. As time goes on, these fees keep climbing.
Maintain Lower Auto Insurance Rates
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Believe it or not, more and more auto insurers are linking
late bill payments with auto insurance rates. They claim to
have found a correlation between those with poor credit
(late bill payments) and auto claims.
So even though you may be a good driver, without any
accidents or claims, a few late payments on your bills will
affect your credit report which will in turn effect your
auto rates.
Keep Your Services and Products
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More providers of various services, like Internet, are
providing ample warnings that the service will be shut off
if payments are late. The same applies for products that
you lease or have on lay-away. While the loss of any of
these are not life threatening, it can be a hassle to deal
with, perhaps embarrassing, and costly to get the service
or product re-instated.
Keep Your Car Starting
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You may say, "What, keep your car starting??" Yes, while
the popularity is still catching on, some used and new car
dealers are now installing a small device under the
dashboard. It will signal you when a car payment is due and
if you don't make a habit of making your car payments on
time, this little device will prevent your car from
starting. In such cases, you need to make a phone call to
get the security code to start it.
Enjoy Peace of Mind
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By routinely paying your bills paid on time, you have the
peace of mind knowing that your bills are in order and that
you won't get socked with unexpected late fees or service
charges. This is as they say on the TV commercials,
"priceless".
About The Author:
Bruce Dinger is the author of the e-book "How to Save Time
and Money When Paying Bills". This e-book thoroughly
explains how to obtain these benefits and also offers a
number of money saving tips, including: how to never ever
pay another credit card late fee, how to easily and
automatically save tens of thousands of dollars on your
mortgage and much more. And, the best part is, most of what
is described can be done for FREE. Visit
http://www.howtosavetimeandmoney.com for more details.
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