What's a sure way to harm your credit score? Being late with payments or missing them completely. On-time payment history is one of the biggest factors in calculating your credit score – and, according to a new survey from CreditCards.com, women are more likely to miss a credit card payment and suffer the credit score consequences.
Out of the 1,000 adults surveyed, 42% missed at least one credit card payment. Almost half (48%) of women admitted missing at least one payment, compared to 35% of men.
Why would women miss more payments? The wage gap may explain some of the difference. According to a report from the Pew Research Center,women earned approximately 82 cents for every dollar that men earned in 2017. Single mothers may fall into the 35% of CreditCards.com respondents who said they missed payments because they didn't have the money – and they may also be in the 13% of respondents who said they were too busy to make their payment.
The most frequent excuse for missing a payment was simple forgetfulness (60%). Maybe women are more forgetful than men on average – or maybe men may not be willing to admit they forgot about a payment.
Not everyone learns from payment mistakes. The survey found that 17% of Americans had missed anywhere from two to four payments, and 7% missed five or more payments – doing enormous damage to their credit scores.
You don't have to pay your bill in full, but you must at least make the minimum payment on time. Carrying a balance, as 57% of survey respondents have, will cost you some extra interest and it will affect your credit score slightly by increasing your credit utilization (the amount of credit in use relative to your credit limit). Making partial payments is much better than being late on a payment simply because you can't pay off the whole balance.
Credit card myth alert! Almost one-quarter (22%) of respondents believed that carrying a balance on a credit card helps your credit score. In fact, higher credit utilization hurts, not helps, your score. It is true that credit card companies would prefer that you carry a manageable balance – if you pay your bill in full and on time every month, they aren't making money off you from interest – but carrying a credit card balance does NOT improve your credit score. This is a myth that refuses to die. Could the credit card issuers be spreading it to increase the billions they earn in interest payments?
A more serious question: How can you avoid late payments? The simplest method is to put your credit card bill on an automatic payment system with your bank account, just as you can apply automatic bill payments to your credit card. However, you must make sure that any credit card and bank account information changes are updated on time to keep automatic payments flowing, and that you have the funds to pay.
Many banking apps will allow you to set payment reminders through your smartphone – and if your bank doesn't have a suitable app, you can set up your own smartphone reminders. Of course, there's always the old school method of writing your payment schedule down on a real desk calendar (remember those?).
If you're mailing payments, send them well in advance of the due date. Depending on the distance involved and the time of year, you may need to send payments up to two weeks early. A week is the bare minimum and may not be enough in all cases.
There may be differences between the genders, but late payments will harm your credit score whether you're male or female. Do what you need to do to ensure that you always make payments on time. If you’re short on funds, at least make the minimum payment to avoid extra fees and possible increases in interest rates. Your credit score is too important to let late payments ruin it.
You can check your credit score and read your credit report for free within minutes by joining MoneyTips and using our Credit Manager tool.