The Power of On-Time Payments: How It Impacts Your Credit

Hi, it’s Michael Sherriff here, welcoming you to another edition of UK Credit Secrets. Today, we’re focusing on one of the most powerful ways to boost your credit score—on-time payments.

Paying your bills on time is crucial, but do you know just how much it can affect your credit? Let’s dive in.

Tip of the Week: Set Up Payment Reminders

One of the simplest yet most effective ways to ensure you never miss a payment is to set up reminders. Whether it’s an alarm on your phone, a calendar notification, or an email reminder, having something in place to jog your memory can make all the difference.

Here’s what you can do:

1. Use Your Bank’s Reminder Service: Many banks offer free payment reminder services, which can be set up through their online banking platform.

2. Automate Payments: If possible, set up automatic payments for your credit cards, loans, and bills. Just make sure you always have enough funds in your account to cover them.

3. Schedule Reminders: If you prefer a manual approach, set reminders a few days before each payment is due, so you have time to act.

By making on-time payments a habit, you’ll be protecting your credit score and avoiding late fees.

Main Article: The Power of On-Time Payments—How It Impacts Your Credit

On-time payments are the most significant factor in determining your credit score, making up 35% of your overall rating. Here’s why they matter so much:

1. Payment History is King
   Lenders want to see a track record of reliable, on-time payments. Even one late payment can stay on your credit report for six years and lower your score. The more consistent you are with timely payments, the better your score will be.

2. Avoiding Late Fees and Penalties
   Aside from the hit to your credit score, late payments often come with fees and interest rate increases. Staying on top of your payments not only protects your credit but also saves you money.

3. Building a Strong Credit Profile
   Consistently paying on time demonstrates to lenders that you’re a responsible borrower. This can lead to better credit offers, lower interest rates, and more favourable terms on loans and credit cards.

4. Recovering from a Late Payment
   If you’ve missed a payment, don’t panic. The sooner you catch up, the better. Contact your lender to discuss your options—sometimes, a one-time late payment won’t be reported if you address it immediately.

5. Long-Term Benefits
   Over time, a history of on-time payments will significantly improve your credit score. It shows lenders that you’re low risk, which can open doors to financial opportunities in the future.

Making on-time payments a priority is one of the simplest yet most impactful ways to improve and maintain a healthy credit score.

Tool Spotlight: Payment Automation Services

To make on-time payments even easier, consider using tools and services that automate the process. Here are some options:

1. Direct Debits:
   Setting up direct debits ensures that your payments are made automatically each month, reducing the risk of forgetting a due date.

2. Standing Orders:
   A standing order can be set up through your bank to make fixed payments regularly. This is ideal for loans and credit card payments.

3. Budgeting Apps:
   Apps like Yolt or Emma can help you manage your finances, set payment reminders, and track your spending to ensure you always have funds available for your bills.

These tools can help you stay organised and ensure that your payments are always on time.

What’s Next?

In our next edition, we’ll be exploring credit utilization and why it’s more important than you might think. Keep an eye out for “Credit Utilisation: Why It’s More Important Than You Think.”

As always, if you have any questions or need advice, just reply to this email. I’m here to help!

Cheers,
Michael Sherriff
Founder, UK Credit Secrets