Making Payments Count

Prevention can safeguard an individual from the potential problems associated with a derogatory mark from the creditor on their credit report.

1. Do your homework. Make sure you know when the billing cycle ends. Prepare a file for each of your creditors and keep this in your file along with a copy of the cardholder agreement and a front and back copy of your card (in case your card is lost or stolen). Often consumers assume that their payment is late if it is received thirty days after the due date when in fact the credit card may consider it thirty days late if the payment is not received thirty days after the end of the billing cycle. By reading your cardholder agreement you can find out the policies of each creditor.

2. Be prepared. Keep a monthly file. As you receive each creditor statement, log the date paid, the method of payment, the amount of the payment and reference numbers if possible, i.e. check number, money order number, etc.

3. Be diligent. If a creditor has reported something in error, contact them as soon as possible and have all your information before you call. If the company offers to remove the reporting, ask for a signed letter on their company letterhead stating they are going to remove the derogatory mark. Check your credit report and make sure that the negative reporting was removed.

4. Don’t be afraid to ask. If you know your payment is going to be late contact the creditor immediately. Ask to skip a payment, ask for an extension, ask to make a reduced payment or ask for a better interest rate. Verify that it will not affect how the account is reported. Realize that the US Postal System is not always consistent. If you need to send a payment late, overnight it and track it. The cost of the postage is nothing when compared to the cost of bad credit. Don’t wait and try to “cure” and already existing problem when you can save time and money by preventing one.

So remember to exercise, eat right, and protect your credit.

In the event of a missed or delayed payment, the instincts of most people compels them to ignore the problem. However, in many instances, communication between consumers and lenders can prevent a derogatory mark from impacting your credit score. At the first sign that a late payment may occur, contacting the creditor may create the opportunity to negotiate a payment. It may also be requested that a payment be skipped all together. Of course in doing so, interest will most likely accumulate for two payment cycles, but often late payment fees can be avoided. Most companies do have a program to work with customers with extenuating, short term circumstances, they simply don’t promote and advertise this to consumers. The key , though, is Communication. Much in the same way, prompt and succinct contact with lenders can help when unauthorized or disputed charges arise. In most cases, illegitimate activity needs to be reported to the bank within 30—60 days depending on their policies. In general many problems that could plague financial histories for seven or more years can be prevented by addressing them immediately and not waiting to try.