Tips to Never Miss a Payment

Mother and daughter using laptop at home

As you work to build your credit history, making on-time payments and keeping your credit card balances low are the most important things you can do.

Your credit reports contain a record of your payment history on your debt accounts as reported by your lenders. Credit scoring models, such as FICO®, are then able to use this information to help them calculate your scores.

As a result, it's crucial to your credit health that you make it a priority to always pay your bills on time. Here's how to do it.

How Your Payments and Credit Usage Affect Your Credit Score

The two most influential factors in your FICO® Score are your payment history and your credit utilization.

Your payment history refers to your track record of making debt payments every month. On-time payments help improve your score, while payments that are late by 30 days or more could have a significant negative impact on your credit score.

Your credit utilization refers to how much of the available credit on your credit cards you're using at a given time. For example, if you have a card with a $1,000 limit, a $500 balance gives you a utilization rate of 50%. If your credit utilization is consistently high (above 30%), it could damage your credit score. The lower your utilization, the better. Those with the highest credit scores tend to have credit utilization in the low single digits, according to Experian data.

Strategies to Help You Always Pay on Time

Because your payment history makes up the largest portion of your credit score, it's a good idea to make it a priority to never miss a payment. Here are some tips to help you stay on the right track:

  • Make at least the minimum payment every month. Paying the minimum amount due is enough to maintain a positive payment history. Over time, however, it could result in a higher credit utilization and interest costs. If you can afford to do so, paying in full every month not only helps your credit score but also saves you money on interest.
  • Set up automatic payments. Setting up autopay on your account is an easy way to ensure that you always make payments on time because you don't have to worry about doing it manually every month. Just make sure you have enough money in your bank account to cover your monthly payment.
  • Use reminders. If you don't want to rely on automatic payments, set up reminders on your calendar or request email or text alerts from your credit card issue so you know when it's time to make your monthly payment.
  • Make multiple payments every month. To stay current on your account, you have to make at least the minimum payment once a month by your due date. But if you want to keep your balance low, you could make multiple payments every month.

If you think you might have trouble making a payment on your credit card, reach out to your credit card issuer immediately to talk about potential options, such as a modified payment plan, reduced interest rate or forbearance.