Should I Contact Creditors If I Am Falling Behind?

We all may have times in our life when we struggle to make our payments on credit cards, loans and mortgages. If you are having a tough time paying your debts, you may be tempted to just ignore the problem, or engage in wishful thinking, and hope it goes away. Unfortunately, this doesn’t work and in fact, is the worst possible thing you can do. If you ignore overdue payments, late fees and penalties will be added to your account and you may find yourself in a growing snowball of debt. Perhaps worse, if you are 30, 60 or 90 days late, your creditors will report your delinquent payments to the three major credit bureaus, Experian, Equifax and Transunion. When that happens, your late payments will damage your credit score, and remain on your record for a long time afterwards.

If you are falling behind in your payments, the best thing you can do is to call your creditors as soon as possible and explain your situation. If you can call before the account is sent to collections, so much the better. Calling the creditor before they call you shows good faith on your part, and most creditors are willing to work with you on arranging an alternative payment schedule, as long as they know you are conscientious and willing to pay back the money you owe. Having to chase delinquent borrowers, make collection calls, or send your account to a collection company, costs creditors money. They would far rather make arrangements with you than to go to the time and expense of sending your account to collections.

Your credit rating is based on the information in your credit report, which is usually sourced from the three major credit bureaus. This rating is the primary tool used by lenders when you apply for any form of credit, and determines whether or not you qualify for a loan. Having a good credit score means you get better rates, higher credit limits, and other benefits. If you find yourself falling behind on your payments, getting in touch with your creditors can preserve your good credit score and make a big difference over time.