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Can a Late Mobile Phone Payment Hurt My Credit?

What in life is really essential to our survival? It’s a pretty short list, headlined by food, shelter and clothing, but many people nowadays would also include a mobile phone among their list of indispensable “must-have” items. But did you know that a mobile phone payment could also affect someone’s credit scores? Currently, the account can only have a negative impact if you default on your payment, a sign that you might be falling behind on your regular financial responsibilities.

For most of your other payments, including a car loan, a mortgage or credit cards, you are rewarded for paying your bills on time and penalized when you miss or are late on a payment. A mobile phone, however, affects your credit scores only if you default on your payments and it is charged off or sent to collections. One key thing to know about charged off debt, however: if your debt is charged off, you’re still obligated to pay it.

Many credit scoring models include consideration of your payment history and your credit utilization ratio (your outstanding balance as it relates to your total amount of credit available). The length of credit history, your credit mix, and your amount of new credit are also factors that can be considered, but may not have as much weight as the others.

Because your payment history is a major part of many scoring calculations, it is important that you avoid defaulting on any payments whatsoever. While paying your mobile phone bill on time doesn’t affect your credit scores positively, defaulting on the account is a serious negative that could have a potentially severe effect on your credit scores.

Is it already too late for you? If you currently have a defaulted mobile phone payment on your credit report, don’t be disheartened. Defaulted debt that’s either charged off or sent to collections will stay on your credit report for seven years. However, if you pay it off and recommit to using good credit behaviors like paying your bills on time each month, it will begin to recede into the past before you know it. Making good credit a part of your everyday life is something you can always reaffirm your commitment to; good behaviors beget good scores, so know that your efforts to improve your habits won’t be in vain.

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