Credit Cards and Credit Scores

It is one of the most uncomfortable feelings in the world to not being able to afford your credit card bill. Many of us are familiar with that gut wrenching sensation when the monthly visa bill arrives and you barely have enough to cover the minimum payment. Unfortunately, this is considerably common these days. In fact, according to Financial Post, a new debt survey shows that over 50 percent of Canadians are $200 dollars away from being unable to handle their monthly costs.

Paying your credit card bills late or not paying them at all can majorly affect your credit score, but depending on your case, you could take certain steps to make sure that the problem does not get out of hands. Make sure to talk to your bank, as each facility has a different process dealing with late or missed payments. If you only missed one credit card payment, chances are that it will not lower your credit score by much so it would be best to contact your credit card provider as soon as possible. If missing a payment was a mistake, explain the situation to your bank and they might agree to waive the fee. Remember, that if you pay any amount that is smaller than the minimum payment, it will be considered as a missed payment, so do your best to pay that amount each and every month to avoid problems. As interest charges will apply to all the purchases made with the card, you could potentially also look at an increase in interest rate.

A few missed payments in a row will most definitely be reported to the credit bureaus, so avoid missing the minimum payment at all costs. If for example, you miss two payments in a row, your credit score might drop at much as 100 points and your interest rate will immediately go up. A big drop in your credit score should definitely be an alarm for you since most creditors look at these scores to determine whether you are a high or low risk to borrow money. With a low score, you might not be eligible to obtain a high limit on your credit card, as well as get low interest loans and rates. Many of the lenders keep their best offers and rewards to those with the higher credit scores and thus you might miss out on the very best deals. If your future plans consist of buying a place and getting a mortgage or even buying a vehicle, you have to do your very best to keep your credit score in good standing.

After missing two or more payments, your account will get flagged and might be turned over to a collection agency. Dealing with these agencies can be a major hassle and can get extremely stressful. Known for their pushy tactics, they might try to reach you at work, at home and harass you both by phone and mail. Their ultimate task is to collect your outstanding debt.

Therefore, it is never by no mean ever a good idea to avoid your credit card bills. Address your debt and if you cannot pay the whole amount, make sure to make the minimum payment on time every month. If you still have money problems, always contact your financial institution to ask for feasible solutions and inquire about possible lower payments to settle your debt and get you back on track to your bright financial future.

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