You may have heard that making on-time payments is the key to having a good credit score. But just how important is it to make your payments on time? If you’ve made the mistake of missing payments in the past, what can you do to help improve your credit score now?
Also known as your “payment history”, makes up 35% of your credit score – the most of any other category.
The typical timeline goes as follows: 30 days, 60 days, 90 days, 120 days, 150 days, and then it will be written off as a loss and categorized as “uncollectible.” It’s extremely important to keep up with payments or be aware that you’re late. In addition to negatively impacting your score, chronically missed payments may lead to higher interest rates, late fees and penalties, reduced credit limits, and even court judgments.
Struggling to pay on time?
If you know you’re down to the wire on a payment, call your credit card company. On some occasions, if you advise them in advance that it might be late, they can make a note on your file. And if you have it, providing the payment confirmation number from your online banking may help you too.
You can also look at options like payment deferrals and refinancing, both are better options than being late or missing a payment.
How to Practice Better Financial Habits
If you’ve had a missed payment or two, it’s essential to focus on practicing better credit habits going forward to help improve your credit score:
Keep your credit utilization below 30%
Use a tool like Borrowell to track your credit score
Limit how often you apply for new credit
Get a plan in place to get back on track to pay bills on time
Set automatic payments
Use tools like for bill tracking and bill reminders
What are some tips and tools that can help?
There are a couple of simple steps you can take to make sure that you aren’t late on payments.
Get Ahead of Your Bills
Borrowell's free bill tracking tool can help you stay ahead of your bills. Borrowell securely links to your existing bank account and automatically predicts your future bills and balances so you know what your cash flow will look like during the month.Reminders and alerts help you pay your bills on time and give you a warning if your balance is running low.
Download the free Borrowell app to get started!
Set-up Automatic Payments
This can be done with your bank; the caveat is that you need to make sure you have enough money in your account otherwise you could run the risk of getting hit with costly bank and Non-Sufficient Funds (NSF) fees.
Make a Budget to Track bills
Write down all of your current monthly payments, including interest. You should prioritize paying off the higher interest debts first. If you find yourself paying a very high-interest rate on your debt, it may be a good idea to move it over to an account with a lower interest rate, if possible.
Then, start scheduling reminders or notifications on your phone or calendar.
For example, if you have a credit card with a 19.99% interest rate and you’re late on payments, it may be in your best interest to pay off this debt with a low-interest personal loan. Then, you can pay off debt quicker. thanks to lower interest payments.
If your biggest obstacle is forgetfulness, you can also try and pick one day each month to pay all your bills. However, this tip might not be feasible if you have irregular income or unpredictable cash-flow.
The Bottom Line
Monitoring your score is one of the best ways to help you get your finances on track, it’s free and only takes a few minutes. In addition to features like free bill tracking, the Borrowell App provides you with your free credit score and offers personalized recommendations to help you improve your score. You'll receive free weekly updates to your credit score so you can keep a regular pulse of your credit health. You can also see what financial products match your profile and your likelihood of approval in minutes.
Borrowell is dedicated to making financial stability possible for everyone. With over 1.5 million members, the company offers free credit scores in Canada, education, weekly credit monitoring, credit building solutions, as well as digital tools like AI-powered credit coaching and personalized financial product recommendations. For more information, visit borrowell.com or download the mobile app for Android or iOS.