What sort of bill payer are you?
Do you have all your bills set out in a spreadsheet and know exactly what’s due on what date? Or, are you like many of us - having no idea what or when bills are due – and you wait for an SMS from your lender to remind you.
If the second scenario is more you, then under the new credit reporting system you may benefit from getting a bit more organised.
Soon banks, credit unions and other finance companies will start to report to credit reporting bodies whether you’ve paid your credit card bills and loan payments in full and on time. This information, referred to as your ‘repayment history information’, will be recorded monthly on your credit report, which other lenders will see when you next apply for a loan.
Lenders use this information – together with other things like your income and expenses – to assess your ability to repay the loan. If the lender can see that you pay your credit card bill and loan payments on time, they’re more likely to lend to you.
It’s important that you don’t let forgetfulness or disorganisation mean that you miss your payments.
Our tips for making sure your repayment history makes you look good are:
- Talk to your lenders about setting up direct debt arrangements – This takes away the worry of trying to remember when your payments are due
- Keep your details up to date with your lenders – For some of your accounts (like your credit card), you’ll need to get an account statement from your lender to tell you how much to pay. Whether you get it by post or electronically, make sure your lender has your current address. If your lender offers a payment reminder service, sign up to get an email or SMS just before your due date
- Don’t let your holiday give you a headache! – If you’re going away for a holiday or for work, make sure you’ve made arrangements to pay your credit card bill and make your loan payments.
Of course, unless you’re super organised, it’s possible that you might slip up from time to time and miss your due date by a couple of days.
That’s OK – under the law, your lender will report that your payment was made “on time” provided it was made within 14 days of the actual due date (and you were up to date with your previous month’s payment). But keep in mind that you still might be charged a late fee, or miss your opportunity to have ‘interest free days’ on your credit card.
What happens if you do miss a payment by more than 14 days?
Don’t worry too much – a missed payment is not a ‘black mark’ which will stop you from getting credit. The good thing about the new credit reporting system is that each payment you make on time will help build your good credit history.
Sometimes you might not be able to pay due to something that’s happened in your life, and you might miss a few payments.