Your Credit Score Is At Risk
As you already know, almost all banks, credit cards, mortgage companies and other lenders rely on your credit score to help assess the risk of lending money to you. Paying any of your payments late β even something as small as your mobile phone bill or a department score credit card β can result in negative remarks showing up on your credit score. If you are late enough times, or fail to repay the late payment in full, then your score will start to drop.
Refinancing Can Be Affected
If you already have a mortgage, then a lower credit score can be a problem when you try to refinance. The process of refinancing involves taking out a new mortgage, in which your lender will reassess your risk using your credit score as one of the indicators. If you have been making late payments, you might end up having to settle for a higher interest rate or you may even be declined for the new mortgage.
Making A Late Payment? Contact Your Lender
If you are caught in a bind and have to make a late payment, it is best to get a call in to your lender as soon as possible. First, there may be a grace period in which you can be a few days late without any penalty. If that little bit of breathing room is all you need to get caught up, you’re set. If not, you can let them know your circumstances and discuss what options you have.
It is essential to pay your monthly payments on time, even if it means making some small sacrifices in other areas. The better your credit score looks, the more opportunities you will have to make positive financial moves in the future.
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