Perhaps you misplaced the letter or statement or simply thought you had already paid, but according to our research 5.5million of us missed a bill payment last year.
Whether it was a bill for electricity, water, loans, the internet, mobile phones, satellite TV or a missed payment on your credit card it probably didn’t seem like much of an issue.
However, there are long-term affects to missing a payment on any of these bills – it can have a serious impact on your credit score.
Your credit profile maintains records of all missed payments and lenders use these figures to assess your ability to repay on a regular basis. A low credit rating will reduce the likelihood of you receiving a market-leading rate from a lender, whether it is for a credit card, loan or mortgage. To summarise, the worse your credit score is, the higher your payments will be.
So protecting your credit record by paying bills on time is crucial – which is why you should take some simple steps to make sure you don’t run late.
By setting up a direct debit to cover your minimum monthly payments you can ensure that you always hit your deadlines. This is particularly important with credit cards – the bills that consumers over the age of 25 are most likely to ignore.
It is much better to pay that minimum monthly amount rather than not pay anything at all. Then you can make the decision each month as to whether you want to pay a little extra.
To help you reduce the balance on your credit cards, you should move to a 0% balance transfer card – a host of which are available through our credit card comparison tool.
By transferring your balance on to one of these cards you will not pay any interest on the balance for the length of the 0% period – meaning that all of your payments will go towards paying the balance back.
There are a host of good deals on the market, but here is my pick of three of the best (click on the links to find out more about each deal):
- Virgin Credit Card – The longest 0% balance transfer period in the UK at 15 months, allows you to eat into your capital without worrying about interest charges. It also includes 0% on purchases for three months, has a typical APR of 15.9% and a slightly lower than average 2.98% balance transfer fee.
- Capital One Platinum – 0% on balance transfers and purchases until 01 November 2008. However, the factors that make this deal particularly attractive are a low handling fee of 1.7% and a low typical APR of 9.9%.
- Halifax One Online Special – A card for those of you who are likely to keep on spending – it has the longest combined 0% balance transfer and purchase period in the UK at 12 months (typical APR 15.9%, handling fee 3%).
Of course market-leading deals are only available to those with good credit ratings. If you’ve missed a number of payments in the past then chances are that your credit rating is less than exemplary.
In that case you should use our Eligibility Checker to compare deals you are likely to qualify for based on your credit profile. Remember that making a series of rejected applications for credit cards will only further harm your credit score – so you’re much better off using this tool to gain a clear perspective on what’s available to you. Using Eligibility Checker does not register anything on your credit record.
If you fear that your credit rating may already be worse for wear, then take action to boost your credit score. Here are a few handy hints:
- Get a copy of your credit profile – Apply to a credit reference agency such as Experian, Equifax or TransUnion. Once you receive a copy of your credit profile, ensure it is up to date - for example, if you have paid a debt that was the subject of a county court judgment make sure it is shown on the file.
- Ensure all your payments are made on time – Setting up direct debits is a simple way to meet bills without facing late fees.
- Get on the electoral roll – If you’re not there already, sign up to prove you have a fixed address.
- Notice of correction – Credit reference agencies will allow you to explain a period of poor credit performance. Attach a notice of correction to explain why you missed payments (as long as there is a valid reason).
- Co-signing – Ask a family member or friend to co-sign with you for a small loan or credit card and ensure you meet all repayments on time.
Don’t assume that all hope is lost if you are rejected for a credit card application. It takes some time for your credit history to gain momentum but you can get back on the right track. In the meantime, shop for credit cards sensibly with our Eligibility Checker tool and make sure there are no more missed payments.
DISCLAIMER: Please note that any rates or deals mentioned in this article applied at the time of writing and may no longer be available/applicable today.