Pay your bills, and pay them on time. Even if you have always had good credit, your credit score can drop dramatically because of a simple mistake.
A steep credit decline can stop you from being able to get a mortgage when you decide to buy a home – it happens surprisingly frequently to mortgage applicants across the country. The main culprit is unpaid phone bills. Even something as simple as not paying a cancellation fee can lead to your account being taken to a collections agency. Sometimes, these are fees or bills you were not even completely aware of, or you simply forgot about them. If you leave them for over a month, you run the risk of damaging your credit rating.
Tips to ensure your credit score is not affected by your bills:
- Be aware that sometimes when you cancel an account, automatic billing and email notification of outstanding payments may be discontinued…without your knowledge!
- If you ever have a conversation with a creditor to dispute the charges – ensure you record the call. Proof of the conversation may be important if the promised changes do not materialize.
- If you pay bills with your credit card – make sure to notify the companies when/if your credit card number changes. If you wait until the payment cannot be processed before providing this information, it can also affect your credit.
- Always record the payments you make. You can usually take a screenshot or download a receipt for your payments. This way if the company claims you missed a payment, or they did not receive it in time, you can send them documentation.
- If you move, contact Canada Post and ask them to forward your mail for at least six months. In this time you will be sure to receive any bills or important information that may have been processed before you updated your mailing address.
Reputable companies will make an effort to contact debtors for the payments before taking extreme measures, such as going to a collection agency, but it happens more often than you think. If you are in a situation where an unpaid bill has caused your credit rating to drop, contact the company and speak to a representative to try to resolve the problem. The hope is that you can convince them to correct the credit report and contact the credit bureau right away. The faster you can deal with the situation, the better.
Remember, if you are applying for a mortgage, having unpaid bills can result in paying a higher interest rate on your mortgage, or you may not be approved at all. Make sure to take care, ensuring that all your bills are paid so that you will be in the clear when the time comes.
If you have any questions about applying for a mortgage or would like some help with your home search, feel free to call me at 416-921-1112 – I would be happy to help!