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: