Making timely payments will help you establish a good credit history and demonstrate to other creditors that you are a responsible borrower, a quality that can benefit you for many years into the future. There are many advantages to making payments on time, making extra payments as well as paying more than the minimum required payment.
Advantages to staying ahead
- Higher credit score by credit agencies such as Experian, Transunion or Equifax
- Save hundreds of dollars on interest by paying more than the minimum or making additional payments on the principal
- Avoid late fees by paying on time
- Eligible for lower interest rate due to higher credit rating on mortgage and auto loans
Disadvantages of getting behind
- Lower credit score by credit agencies
- Hundreds or thousands of dollars wasted on additional interest, finance fees and/or late fees
- Higher interest rates for mortgages, automobiles or business loans
Additionally, credit history and responsible borrowing are being considered by insurance companies and employers during the application processes. A good credit history will go a long way.