Paying your bills on time is the key to improving your credit score. This may seem obvious, but very few people know the consequences of being delinquent in paying bills. But first, let us look at what late payments can do to your credit rating. Paying bills after the due date can create negative information on your credit report that credit report agencies maintain. When it comes to loans and credit cards, it is important that the bills are paid on time because if you are late or skip a payment, your credit score will decrease by several digits, not just one or two. The impact of this carelessness is long term, in the sense, your creditors and lenders will stop doing business with you altogether. 

The benefit of having a credit card is that you can always choose how much to spend and how much to repay as long as the repayment amount is equal to or more than the minimum balance due. This will allow you to budget accordingly and use the rest of the money for other things. However, paying only the minimum balance every month has a negative repercussion. The outstanding balance will accumulate on which you will have to pay fees and interest charges later. Often, this amount is significant compared to taking out a personal loan from a bank or credit union. What follows is one of the worst things that can happen to your credit rating and in general your financial reputation. Your account will go to collections. So, if you skip several payments or neglect to pay monthly minimum balance, your creditor will turn over the account to collection agency. These collection agencies can be ruthless, and more often than not, send out the negative information that will remain in your record for up to seven years or more. 

If you are asking yourself, “How to boost my credit score?”, here is the answer. Ideally, paying your bills on time will save your credit score and increase it overtime. Paying the outstanding balance in its entirety is another way to boost your score. It is true that your creditors want to be paid on time. However, they certainly understand financial difficulties faced by their clients. So, if you are willing to talk, they can come up with a repayment plan that is favorable to your situation. This will not only save you a lot of money in the long run, but from legal issues as well. 

On a ongoing basis, you need to demonstrate to your creditors and lenders that you are actively reducing the balance owed to them. Depending on how much you owe and the type of debt, you can consolidate certain debt and make it easy on your pocketbook. Managing the debt by having a proper plan will keep your score from decreasing further. It could also increase your score eventually. With the right type of strategy, you can remove negative and incorrect information on your report and save hundreds, even thousands of dollars every month.