Failure to pay your bills in a timely fashion has consequences which can impact on many areas of your life. Each late payment is recorded as such on your credit report so the immediate consequence is the knock on effect it has on lowering your credit score. The result of a reduced credit score is the subsequently higher cost of borrowing. It can affect your ease of obtaining credit, the interest rate on your mortgage payments and the raising of your insurance premiums.
Each person has a different collection of bills to service each month and each bill has different consequences if not paid, though each bill not paid contributes to a blot on your credit report. If your habit is to deal with loan sharks and door step lenders then the immediate result of failing to pay will be a hefty additional charge and the possibility of broken knee caps.
There is one benefit which you do receive by making your payments late which is often overlooked. If late payments continue you will be able to establish a deep and meaningful relationship with your assigned debt collectors. This can be very welcome for those who like to make new friends on the telephone and have a daily chat.
Failure to pay standard utility bills on time such as electricity can result in the utility being disconnected, leading to a reconnection fee. This should be avoided at all costs and it is often cheaper to borrow in the short term to prevent this eventuality than to pay the reconnection costs.
Failure to pay your insurance premiums on time can leave you without insurance coverage plus raised premiums once your payments are brought up to date. A simple failure to pay a library book fine can haunt you months after the event by lowering your credit score. Failure to pay payday loans on time will result in heavy penalty fees and most probably lead you into debt. Even though they don’t check your credit score before issuing such loans, they do report your failure to pay to the credit bureaus.
Most auto loans are issued subject to security with the car used as security. If you make your auto loan payments late then you can expect to see your car towed away. Failure to pay auto title loans on time can even land you with extra charges if your car is repossessed as they expect it back in immaculate condition.
Student loans which are paid late have far reaching consequences particularly if you have a co-signer on a private loan. Not only is your own credit affected by your late payment but that of your co-signer too who will also find themselves subject to collections activity if you fail to deal with the matter promptly yourself. Many a family has suffered breakdowns in relationships when a guarantor has been let down by the irresponsibility of the person who they stood guarantor for. If you have problems with a private student loan you should make your co-signer aware of the problem before it impacts on them.
Both private and federal student loans are non dischargeable and will follow you around until paid. You should expect to receive collections activity on your accounts if you pay late as well as charges, and you will lose any further rights to federal state funding. Tardy payers can end up losing their professional licences and the right to future deferments if the payments are so late that the loans go into default.
The consequence of paying your mortgage late is the road to foreclosure unless you deal with it promptly, whilst loans secured against your property also pose the risk of foreclosure. Unsecured debts such as personal loans and credit cards do not have such serious repercussions if paid late as there is no security at stake. However credit cards levy late payment fees and two consecutive late payments will land you with an exorbitantly high penalty interest rate.
Paying your bills late is an act of irresponsibility which brings consequences. If your failure to pay is due to economic hardship then you should contact your lenders promptly, let them know there is a problem, and come to an agreement with them. It won’t protect your credit score but it will at least save you costly late payment charges, default notices and the charming intrusion of debt collection calls.