Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

Should You Be Worried If You Miss A Payment?

Missing an occasional payment will not affect you as much as missing a payment because you lack the funds necessary to pay your bills on time. Should you be worried if you miss a payment? If you find yourself in the latter scenario, you may want to pay attention.

There are some negative effects of missing payments:

Late on a payment? You may be charged a late fee anywhere from $25 up to $35.

You may get an interest rate hike that can affect all your future payments, causing you to pay more for the item or items you have purchased over the long term. These interest rate increases are due to late payments and can affect your credit.

Did you miss several payments and continue to charge on your credit card? You may find yourself paying over-the-limit fees and extra charges on your card for going over the set limit. This can also increase your minimum payments due.

Missing payments can affect your credit report. An R1 means you are current on your payments; an R2 means you are 30 days behind, and an R5 means you are 120 days or more late. The higher the rating reported, the more it will impact your credit report and scores.

Your original creditor may place your account with a collection agency to collect the past due payments from you. Collection agencies will call you frequently about your missed payments and your intention of repaying your debt.

Late payments on your report can affect you negatively if you try to obtain new credit. Future lenders will charge you a higher interest rate due to a lower credit score and negative items being reported on your credit.

Maybe you are the type that runs out of money before the month ends, then you should take a serious look at your budget. If your expenses exceed your income, it is time to begin to take control of your spending.

Perhaps you are not good with budgeting, try this instead. If you get paid twice, a week pay your debts each time you get paid. If your phone bill is $180, try to pay $90 every two weeks. If your mortgage payment is $500 per month, try to pay $250 every two weeks. You will find yourself with extra weeks and extra money to reduce your debts.

Managing your funds takes time and practice. By making an honest effort to gain control of your finances, you will always be sure to make payments on time and have a good credit score and rating. You will be building a solid financial future for yourself and your family.