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Paying Your Bills on Time Pays off

January 10, 2011

Mortgage Banker Gregg FitzGerald

With the economy being down, people are still struggling with their finances with the start of this year.  A lot of customers may find themselves thinking: “Why should I continue paying my bills or my mortgage? I’m struggling to get by.”

The unfortunate truth is that homeowners damage their future financial stability when they pay bills late or stop paying them, because it dramatically lowers their credit scores.

Here’s just a few of the things impacted by a low credit score:

  • Future home purchases/refinance:  Unless you have good credit, it’s tougher to get a home loan. Lending guidelines have tightened in response to the subprime mortgage crisis and lenders are looking closer at giving loans to anyone who is a risky bet for paying them back.

If you let your bills slide, it can be difficult to obtain a mortgage when you are ready to move or refinance to a lower rate on your existing home. In addition, with a low credit score, you probably will not receive the best possible interest rate.

  • Insurance pricing: Many insurance companies use credit scores to help them calculate yearly premiums on homeowner’s insurance and auto policies. A low credit score translates to more expensive insurance costs — adding perhaps as much as 50 percent to an insurance bill, according to Birney Birnbaum, an insurance expert for the Center for Economic Justice in Austin, Texas.
  • Late fees, increased interest rates:  Credit card issuers are feeling the pain of this economy and are seeing increased defaults. As a result, if you are late with payments – even a day – or miss a payment altogether, you can expect to incur hefty late fees and an increase in your interest rate.
  • Employment and housing:  Did you know that many employers and landlords use credit reports to determine if someone is a good candidate?  By remaining current on your bills, you will keep your score intact, which will give you many more options and opportunities in this challenging economy.

At some point, your customers will return to the housing market. Share this information with them so they will not experience negative surprises in the future!  For more information or if your clients need assistance with improving their credit score, call me today!

Sources:  Kiplinger’,,

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