Payday Loans vs. Paying Your Bills Late
If you don't have the money you need in hand to pay a bill on time, payday loans can be a sensible solution for bridging the gap between paychecks. Why would this be a better choice than just waiting a few extra days to pay your bill? You may assume that paying late fee, or in the worst case a reconnection fee, is the biggest consequence. Unfortunately, this isn't always the case. Missing a payment due date can often cause long-term damage to your credit score; a damaged credit score can inevitably affect many aspects of your life.
What exactly do we mean by credit score? Your credit score, or your credit worthiness, is essentially a map of your financial history. Every time you've been issued or used credit, a record is kept of it and your repayment history for other lenders to see in the future. This establishes your credit risk, which then determines what kind of loans you can get and what kind of large purchases you can make. This includes houses, cars, electronics, insurance and more. Your credit score also determines what kind of mortgages, credit cards, and other credit you'll be offered and the interest rate you'll be expected to pay. The lower your credit score, the more you'll be considered a credit risk. This means you'll be less likely to get good interest rates or even be extended credit at all.
What does this have to do with paying bills late? Each time you miss a payment, pay a bill late, or overdraft your bank account, this activity may show up on your credit report as bad credit. Frequent late payments or lack of payment on any bill will be reported. Later, when you try to access loans, find insurance or make large purchases only payable by financing, companies will see the bad credit and may deny you credit outright, or charge you a much higher interest rate. This can all be easily avoided by just paying bills on time.
In addition to affecting your credit score, paying your bills late may have other consequences. You could face the cancellation of insurance policies, the freezing of credit cards and repossession of merchandise. Your past losses will be apparent to even those lenders who don't check your credit score. Companies will see your loss of coverage for non-repayment and becoming re-insured or given more credit may become very difficult regardless of the circumstances under which it happened.
While your payday loan repayment history is also reported on your credit score, a prompt repayment of a flat fee will help improve it from past damages. And while keeping an organized budget is the best approach to paying your bills on time, a payday loan can often be a good way to stay on track when the unexpected happens.
Check 'n Go can help with a payday loan when the unexpected happens.