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Credit Score Killer: #4 - Slow Pays

You have heard it said "Slow and Steady wins the race."  Well, in the world of credit scores, that is not the case.  Slow pays can, and will, kill your credit score.  So what is the definition of a "Slow Pay?"  A slow pay is an account that you pay regularly, but you unfortunately pay 30 days or more past due.  For example, if you have a car loan with 60 payments due over a 5 year period, you have 60 opportunities to negatively impact your credit by "slow pays," even if you eventually pay the lender off.  Yes, that's right.  Even if you pay all the payments and all the late fees that are due, if you go 30 days past due on an account, it will negatively hurt your credit.  

What if I pay 29 days past due and not 30 days?  I am so glad you asked.  That makes a HUGE difference.  29 days late is not negative on your credit score.  But 30 days late can be a Credit Score Killer.  That 24 hour difference can be devastating.

So what are some ways to avoid "Slow Pays" - these "pesky" credit score killers?

  • Know your due date.  Mark it on your calendar.  Put it in your phone.  Burn it into your memory banks.  It is easy to forget your due date when so many lenders do not mail monthly statements.
  • Pay electronically.  Most lenders accept electronic forms of payments.  Pay your payment electronically so you don't have to worry about the mailed check not getting there.
  • Pay first payment right on time.  It is not a good practice to be late on your very first payment.  It will impact your ability to borrow at that particular institution and it will hurt your credit long term. Get started on the right foot.
  • If for some reason, you can't pay on time, don't let it get to 30 days.  Have an urgency not to crossover that dreaded 30 day mark.
  • If you get behind 30 days, make smaller weekly payments to get back on track. The last thing you want is to pay 60 full payments on a car loan and have all 60 be 30 days late.  That means you have killed your credit score, even though you have fulfilled your payment obligations (not to mention all the late fees).

Don't let "slow pays" kill your score.  Go on attack mode and stomp out these Credit Score Killers.  Be diligent to stay out of the "Slow Pay" lane.

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