bills-on-lock

New to the Live Richer Challenge: Credit Edition? Learn more about it HERE.

 

 

Week 2: Credit Improvement

Day 9: Bills on Lock

Today’s Easy Financial Task: Automate your bill payments to improve your payment history record.

How to rock this task:

  • Set up a separate account for your bills
  • Automate bill payments from your bills account

 

On to the next day!

Today, we’re going to talk about paying your bills on time. As we discussed last week, your ability to pay bills on time is the component of your credit history that holds the most weight when calculating your credit score.

Remember:

  • Payment history: 35% of your score
  • Amounts owed: 30% of your score
  • Length of credit history: 15% of your score
  • Type of debt: 10% of your score
  • Inquiries: 10% of your score

 

If you’ve had a few slip ups in the past and not paid bills on time, don’t feel bad.

As time passes, the recent history of paying on time will supersede past missed payments. Then, after seven years, late payments fall off of your credit report altogether.

The purpose of this task is to put in place a process that will help make sure you never make a late payment again.

Here’s how to do it:

 

Open a Checking Account for Bills

Open up a new account at the same bank where you have your current checking account so you can easily transfer funds from one to the other. The new checking account will be specifically for bills. Make sure the checking account you open offers a bill pay service.

Do not connect a debit card to your bills account. (It’s not a fallback account when you want to go shopping!)

 

Automate Your Bill Payments  

Here’s how to automate payments:

1) Tally up the total amount you pay on various bills.

2) Set up automatic transfers of that amount from your main checking account to your bills account.

3) Use the bill pay feature offered by your bank to send out automatic payments to cover your bills. There’s a reason to use bill pay from your bank instead of setting up automatic payments with each company. You want to avoid putting your information in another company’s system. Having your bank transfer money or write checks on your behalf is safer.

 

What About Past Due Accounts?

You may be thinking: getting your life together now is all well and good, what about fixing past mistakes?

Another way you can get a credit score boost is by bringing your past due accounts current. It’s considered an “extra credit” on the FICO score metric.

So, if you do find yourself in a situation where you have some late payments on your report (that are accurate), you can turn the tide in your favor by making a change now. Then, use the tips above to make sure you don’t fall back into the habit of paying late again.

That’s it for today, Dream Catchers!

If you have any questions, leave a comment below. Reach out to your accountability partner(s) to keep each other on track.

 

Share what you’re doing today with your tweeps:

Today I learned how to improve my payment history. Day 9: #Liverichercredit Click To Tweet

Live richer,

Tiffany

 

You can reach out to me here:

Twitter: @thebudgetnista

Instagram: @thebudgetnista

Facebook: The Budgetnista

Private Forum: Dream Catchers : LIVE RICHER

 

P.S. Don’t forget to get your free Live Richer Challenge: Credit Edition Starter Kit. Get it HERE.

 


 

*** Need Help? Feeling Overwhelmed? Want to work with someone one-on-one to improve your credit? Netiva “The Frugal CrediTnista” is offering her renowned, full credit improvement services & consultations at a special discounted price just for Dream Catchers! Learn more and get the help you need, HERE. ***

 

Want to work through the Live Richer Challenge: Credit Edition in a workbook? It’s part of a bestselling series and has already hit #1 on Amazon! Get your copy below.

 

My Lisa Rule: I have 4 sisters and Lisa is the baby (well she’s not a baby anymore). Of all of my sisters, I’m the most protective over her. Before I share any product or service with you, it must pass my Lisa Rule.

What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to either. YOU are my Lisas. I feel protective over you and your financial journey.

The products and services I recommend pass my Lisa Rule. Yes, I may be an affiliate and earn a commission off of referrals, but I would not recommend a product or service that I didn’t believe was helpful and useful.

 

The Challenge is sponsored by

Tagged with:
 
  • Lois Samuels

    I have old bank accounts that I need to payoff but they are not on my credit report. Where do I go to see those?

  • Sondra Frank

    I’m currently doing this so im thinking Maybe I’ll reverse it and transfer all my “play” money out of that same account into a new one. Or, simply use cash, what a novel idea lol

  • Chandra Cunningham

    How do you feel about paying all your bills with a credit card and then paying that credit card off?

    • Trea Prophetic Voice Pullings

      Chandra, I’m doing this because it works more better for me. My reoccurring bills each month are not being reported to the CBs (utilities, cable, phone) unless I default. So paying with a credit card and paying the bill off each month ensures I receives proper reporting for payment…….😍

      • Chandra Cunningham

        OK.. I’m in the same boat.. none of my bills show other than my mortgage. Thank for the reply I was wondering if I had to turn on notifications or something but now I see I don’t.. enjoy your day

      • Barbara Smith

        Great idea Trea!

    • Netiva

      Id watch out for utilization. This works for those with high credit limits, nice, long credit history or who pay the credit card bill prior to a high balance reporting to the credit bureaus

    • Leilani Mayfield

      I have a few friends that do it this way because of the benefits a particular credit card offers such as points/money back. However, they pay the bill in full at end of month.

  • ally101

    This is the Day I have been waiting for!!! I have set up my bill account, my question is with the auto bill pay, do I need to schedule the payment prior to the due date to ensure payment was received. How long in advance should the payments be scheduled? For example, if bill is due on the 5th, do I need to schedule payment for the 1st or even earlier?

    • Sheena Curry

      I do automatic bill pay. usually you need to schedule the payment five days prior to the due date so that they have enough time to send out the check.

  • Tommi

    I used to have two accounts at my bank however I had to close the second account to avoid paying a monthly fee. Are there any good banks that have no fees or minimum balance for a second account?

    • ally101

      Possibly try a credit union. Also, Capital One online banking, I don’t believe has fees.

  • JasmineDenise

    Automated bill pay scares me! I’m worried about the misalignment with bill due dates with my pay days (semi-monthly). I think this came up on the FB page before and I think it’s time I put the suggestion of changing bill’s due dates into play. Okay! I can do this!!!

    • Nyla Moore

      Ask if you can choose your own due date. Most companies allow you to choose.

    • neceyluv

      That’s always been my concern as well. Yep, we can do it this way!

  • Charlene

    What is the recommended credit limit on a credit card used to pay about $500 in monthly bills? I’m thinking about doing a secured card for my bills only and want to stay under 20-30% usage. I was thinking $3000

    • Netiva

      If you’re in active credit rebuilding mode under 10% of credit limit is best

  • Leilani Mayfield

    I have set up automatic bill pay with several companies already. Should I amend this since they already have my bank information in their system?

    • Nyla Moore

      Funny I just asked the same thing before seeing your comment.

  • Shirley Baylis

    I set up the bill pay with my credit union already, but I have to set up the bills to be paid. I will also set-up a bill checking account also.

  • Nyla Moore

    What if I’ve already set up automatic payments through the company’s system, should I change them all to be paid through my bank?

  • neceyluv

    I think I’m going to do this! For some reason (and I think it’s because I just wasn’t being money savvy), I was never fond of auto-pay. I’m always afraid they’re gonna take more out of my account than they’re supposed to! But I like the way Tiffany has it laid out. Thanks hon!

  • wanda

    ok, I am definitely running behind. But because I think this is a very good challenge I am going to hang in there! I feel that this is one of those challenges that rewards those who endure to the end. that will be me!!!