8 Benefits of Paying Bills on Time
By Bruce Dinger
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)
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
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
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
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
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
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
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
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
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.
http://www.howtosavetimeandmoney.com/ for more details.