We all know how important it is to keep our credit score as high as possible. But what can you do if, say, you've lost your job or are just coming up short on cash and you have bills to pay? It turns out that you have a bit more wiggle room with some bills than others, according to FICO, the company that produces the bulk of credit scores that largely determine the interest rates consumers are given for credit cards and loans.
FICO notes that some bills are vital to pay on time to avoid taking a credit score hit. Those are your credit cards and loans, whose payment histories appear on your credit report. You must make at least the minimum payment on a credit card each month, FICO says.
However, utility bills don't appear in your credit history, FICO notes. That includes phone bills, gas, electricity and water.
In addition, other noncredit bills can also slide with varying repercussions but without an impact on your credit. Those would include auto repair bills, the plumber, electrician and others who do work for you.
So, paying those bills past their due date isn't going to hurt your credit. However, if you get so far behind that your account is put in collection, then you've got some big credit score problems. And that could affect relationships with small businesses or sole proprietors. In those situations FICO says it's best to contact them and try to work out a payment plan.
If you ignore the bills for so long you get sued, or if you end up missing four payments in a row, the company you owe could report your account as "charged-off" or obtain a judgment against you -- actions that will result in a major negative impact to your credit.
"Keep this in mind," FICO notes, "you can always get a delinquent account back in good standing by getting caught up with your payments, but once it is charged-off as a loss you probably can't salvage that account; and a charge-off, judgment or collection on your credit report is something you really want to avoid."