First off, let me just say it’s never a good idea to not pay your bills, but sometimes there’s just not enough paycheck to go around.
That’s the unfortunate position too many Americans are facing these days. With the economy still sputtering along and the job market still tight, there are plenty of folks who are forced to make tough decisions when it comes to paying the bills.
So how do we prioritize our bills when we already have bad credit?
The thing to realize is any missed payment can impact your credit score if it’s reported to the rating bureaus. But some creditors are more lenient than others when it comes to the length of time they are willing to give you before reporting a late payment.
1. Medical bills.
Often the hospital or insurance company is willing to work with you on a payment plan or may even allow you to skip a payment.
As long as you’re talking to them and making arrangements, they are unlikely to report your late payments.
“The better informed you are, the more
likely you won’t damage your credit.”
2. Utility bills.
You can generally carry utility bills to the next billing cycle before any threat of reporting takes place.
Even then, by talking with the utility company, they will usually accept a scheduled payment a week or two later. You may find your cable and mobile phone provider will do the same.
Bills that typically can’t or shouldn’t be postponed include payments on secured debt. Secured debt is anything that has collateral attached to it, like a car payment or a mortgage.
These creditors are less lenient and are more likely to report a late payment to the rating agencies. In addition, they have the right to start repossession or foreclosure — and you don’t want to lose your car or house.
3. What about credit cards?
Generally speaking, the credit card companies don’t want to see your credit score go down. They want you to be a customer in good standing, so they are willing to work with you on scheduling a payment in the future.
Just be careful because your interest rates may go up if you are late on a payment. Be sure to ask about this in advance before making any payment arrangements.
It can seem overwhelming trying to prioritize your bills when you have bad credit. Remember, you are trying to create some breathing room here.
By contacting your creditors and asking for a postponement of your payment, you may just get the room you need to keep everyone happy. And the better informed you are about which bills can be postponed, the more likely you won’t damage your credit any further.
Photo source: springfieldcpa.net.