Maintaining a good credit score is essential for your financial wellness, especially if you intend to secure a loan in the future. Paying off your credit card bill on time is a step closer to ensuring you maintain a good credit score.
Besides a good FICO score, there are many other factors you can benefit from by making on-time payments on your credit card bills. You can talk to credit specialists like Symple Lending if you have challenges regarding how to go about your credit card payments.
Continue reading to find out why you should avoid late payments on your credit card bills.
Avoid Hefty Interest Rates
You may incur more outstanding interest charges if you carry forward a credit card debt. You are obliged to pay a penalty of a staggering 30% by making late payments (payments more than 60 days overdue) on your credit cards.
Remember that making late payments may also extend the hefty interest rates on any additional credit cards you hold with your credit issuer. Even if you’ve always made the required payments, credit card companies can increase the interest rate on any other cards you have with them if you, at some point, made late payments.
Maintain a Solid Credit Score
Paying off the credit card bills in the stipulated time will build a strong credit score and lower your debt-to-income ratio. Your lender will always look at your debt-income ratio and FICO scores as critical indicators of how well you can handle the monthly payments necessary to repay the money you intend to borrow.
You can consolidate your credit card debt and minimize your debt usage ratio if you pay your bills on time. Additionally, you may enjoy cheaper interest rates from lending facilities. A strong credit score can improve your chances of qualifying for competitive interest rates. You will eventually save much money over the long run if you are eligible for lower interest rates on your loan.
Maintain a Good Standing on Your Credit Cards
Your credit company may shut your account if you can’t make timely payments or if it is about six months since your last payment. Your utilization ratio—the second-most significant element determining your score after your payment history—is affected by closing a credit card with debt owing. This might eventually lower your credit score.
Paying off the credit card bills on time will ensure that your qualifying factors in lending facilities are favorable and will eliminate accumulating debts. Ensure you clear off your credit card bills on time. Reputable credit specialists such as Symple Lending can help you navigate bad debts through ideal solutions like debt consolidation. Contact customer support today.