Did you know that your credit cards and your credit score are often linked? It's true, and this can happen in a few different ways.
Your credit score will be affected by how you pay or don't pay your monthly credit card bills. If you pay on time, your score will go up over time. On the other hand, your score will go down if you don't pay on time. But time and, for lack of a better word, mercy are two interesting parts of this.
When you know you can't pay your credit card bills, time and kindness come into play. If you don't have the money to pay your bills, it is much better to call the company and explain the situation than to just ignore the bill. When you don't pay and don't tell the company what's going on, they don't know what's going on with you. You may have a good reason why you can't pay the bill, but they don't know that. If you miss a payment and don't tell the company, that missed payment will probably be reported to the credit bureaus after about 30 days. If you don't tell the company when you miss two payments, it's almost certain that it will be reported.
There are better ways to deal with these problems. Credit card companies almost always have the power to let you have more time if you need it. But they can only do this if you talk to them before the payment is due or right after. If you have a good reason for not being able to pay, they can come up with different plans to help you get by for now. Most of the time, if you get the payment to them in a reasonable amount of time, they won't tell the credit reporting agencies that you missed a payment.
Consumers should know that once negative information is reported and added to their credit report, it can stay there for up to seven years. During that time, lenders will see this bad information, which could hurt your future finances. Consumers should also know that the information in their credit reports, which are kept by the three credit reporting agencies, is what makes up their credit score.
The math is easy in this case. If you don't pay your credit card bills on time and don't call the companies to make other plans, the late payment will show up on your credit report. Then, your credit score as a whole will be based on the same credit report. Most of the time, bad information, like missed payments, will cause credit scores to go down. If your credit score is low, it may be hard for you to get credit cards or loans in the future. On the loans you can get, you may also have to pay higher interest rates. To avoid all of this, if you need help making payments, call the companies that carry your credit cards. It's well worth the time and effort it takes.
