Sometimes life gets in the way of making a payment on time. If you can't pay your bills, what should you do to avoid taking a credit hit? Here are four tactics to help protect your credit:
Consider Payment Protection Insurance
With payment protection insurance, you pay a monthly fee so if you can't pay a bill, the insurer covers your monthly payment(s). This approach helps protect your credit from late payments, but you'd still owe the insurer for what was paid, plus a fee. To know precisely what type of protection you're getting, be sure to check the fine print and what it will cost you. Need more information or want to know how to apply for payment protection insurance? Check out the options offered by Navy Federal.
Work Out a Payment Plan with Your Creditors
Contact your creditors before you have delinquent payments to try to negotiate flexible repayment terms, which could potentially include benefits such as:
- reducing or eliminating late charges
- receiving a payment holiday
- making interest-only payments
- avoiding your account being sent to an attorney or collection agency
- avoiding your account being reported delinquent to the credit
Seek Advice from a Credit Counselor
If you feel like you could use some help, reach out to a credit counselor who can negotiate on your behalf and teach you better credit and spending habits. These organizations specializing in guiding people through debt and payments will work out a special payment plan with your creditors. Having less than three months' of expenses in a cash reserve or having reached the limit on your credit cards are a few circumstances that might make you a good candidate for credit counseling and the expertise it can provide.
Send a Letter to a Credit Bureau
You may know that if there is an error on your credit report, you can write a letter to any of the three major credit bureaus (Experian®, TransUnion® and Equifax®), seeking its removal. However, this can also be done if there is something accurate but particularly damaging on your report. A letter explaining the circumstances can be attached to your report and seen by anyone who requests it. If you think there may be an error on your credit report regarding your Navy Federal account(s), we can help you submit a dispute directly to any of the main credit bureaus.
How a FICO Credit Score Breaks Down
Image via myFICO
myFICO. What's in my FICO Scores.
Protect Your Credit
Solid credit is a key factor to achieving your financial goals. If you’re concerned you might miss a payment or already have, consider seeking professional financial counseling.