Try telling that to the credit bureaus. To this day, that blemish sits on my credit report like a big old pimple on Brad Pitt’s forehead. Forget my previously perfect record; that late check knocked my scores down by 50 points or more. I tried to get the strike reversed, but to no avail. I’m still trying to recover that lost ground.
Learn from me, then: It’s never good when you fall behind on debt payments. Aside from a knock to your credit score, you may face other consequences such as jacked-up interest charges, late fees—even repossession of your beloved possessions. So what can you do if you’ve missed a payment or two, or suspect that you will in the month ahead?
First of all, stay calm.
Anxiety and panic—especially if you obsess about the fallout—won’t get you anywhere. Put all of your energy into solving the problem, and building up defenses so that it won’t happen again. And for the sake of financial sanity, don’t bury your head in the sand. Ignorance definitely isn’t bliss here, even if you’re scared to confront the reality. We’ll go over some resources to help you through, in case you need some hand holding (which, by the way, is nothing to be ashamed of).
Now here’s what you can do, proactively and preemptively:
Call up the creditor in question and ask for an extension.
There’s no way to predict which concerns—bank loans, credit cards, car creditors or...
... middle of paper ...
... lower your payment, the less principal you’ll pay off.
If you feel yourself on the edge of a financial cliff with the Valley of Late Payments below, know that you’re not alone. If it’s a matter of tweaking your budget—less takeout pizza, more payments—consult your accountant. And depending on your circumstances, the non-profit Money Management International can help you negotiate new terms and reorganize your financial priorities. Note: MMI can be selective in terms of whom they take on. You have to be in pretty bad financial shape.
Of the five factors that determine your credit rating, payment history is the highest, at 35 percent. There’s no shame in missing a payment, any more than in getting into a minor fender bender or missing an important deadline. Be kind to yourself above all, and remember: It’s not perfection, but correction that matters most.
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