Pay These 6 Bills First When Money Is Tight
Is your money situation a little tight this month? It happens to the best of us. What if you don't have enough money this month to pay every bill by its due date? For the time being, you might need to prioritize your payments.
This isn't the ideal solution. Far from it — paying any bill late could result in a late fee. But thanks to a bit of leeway when it comes to credit reporting, paying bills just a bit late might not hurt your all-important FICO credit score.
This makes it a bit easier to determine which bills you absolutely must pay on time, and which bills you can more easily tackle after their due dates pass.
It's important to keep the roof over your head. And not paying your mortgage payment on time can send your credit score plummeting by 100 points or more. Credit scores are important: Lenders rely on them to determine if you qualify for a loan and at what interest rate.
There is some leeway, though, with mortgage payments. First, lenders can't report your payment as late to the credit bureaus until you're at least 30 days past due. This means that paying your bill one, two, or three weeks late won't hurt your credit score.
Second, according to the U.S. Department of Housing and Urban Development, lenders usually won't start the foreclosure process until three to six months after your first missed mortgage payment.
Even though these safeguards are built in, you don't ever want to take the chance of losing your home. Make sure to pay your mortgage as soon as you can.
If you're renting an apartment, do everything you can to pay this bill on time. Your landlord can send you an eviction notice if you're just one day late with your rent payment. Now, actually evicting you will take time, and most landlords probably won't file a notice that quickly. But you don't want to give your landlord any excuse to start this process in motion.
3. Car payment
As with your mortgage, there is a grace period before your late car payment starts to affect your credit score. Your auto lender can't officially report your payment as late to the credit bureaus until that payment is more than 30 days past due.
However, you need to be aware that if you stop making car payments, your vehicle can be repossessed. If this happens, your credit will suffer the consequences — by up to 100 points. Auto lenders can repossess your vehicle quickly, too. In fact, in most states they have the legal right to repossess your car as soon as you miss a single payment. It's unlikely that your lender will move to take your car that quickly, but why take that risk? If you're prioritizing your bills, this is definitely one to move to the top of your list.
4. Utility bills
Typically, you'll receive plenty of advance warning before your utility providers shut off your services. But you will have to pay these bills eventually to keep them on. Put these bills at the top of your priorities list.
If you are struggling to pay these bills, don't ignore them; call the utility company. Utilities will often work with homeowners who are struggling financially. They might lower your bill for a period of time or defer your payments for a few months to allow you to rebuild your finances.
5. Student loans
Student loan debt is a financial burden for many, but you might be able to work out a new repayment plan with your lender if you are struggling. This is usually easier to do with federal student loans. You might qualify for a deferment, depending on your financial situation. But even if you are struggling to pay private student loans, call your lender. The company issuing your loans might be willing to work with you to keep you from falling into default. (See also: 8 Surprising Ways to Pay Off Your Student Loans)
6. Credit cards
Yes, your credit card issuer can hit you with a late fee if you miss a payment. And yes, your card's interest rate might then soar. But credit cards don't need to be at the very top of your priorities list if you are struggling with critical bills like your mortgage.
Your credit card provider can't throw you in jail if you miss payments, and it can't take your house or car. So paying this provider after making your mortgage and car payments is OK in a financial pinch.
It typically isn't a smart move to pay only the monthly minimum on a credit card, because it's often such a small amount. However, if you're really struggling with money, this is another temporary option you can take. This will keep you current on your bill, and you can always boost your payments back up again once you've regained financial footing. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)
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