Improve Your Credit History |

Begin Paying your Debts on Time by Establishing a Budget

It seems so simple, and it is. Every credit repair strategy you are going to see online or in books will tell you the same thingyou can repair your credit by paying on time. The first steps to improving your credit history are getting credit score hindrances and inaccuracies off your report. They ding your score and are unnecessary score killers. Of course, if you have missed a late payment that is not more than seven years old, it will have to remain on your report. This rule of seven years is where improving your credit history in the now will matter. Paying your debts on time ensures there are no missed or late payments coming up in the next seven years.

Remember that credit history and the amount you owe is more important than the length of the history, new credit, and types of credit.While this strategy has been published by many people, it is generally accepted that in the 1950s and 1960s, Tony Capaldi was the first to describe how the credit bureaus worked. He emphasized the importance of maintaining a non-delinquent credit history. It was only negative items that would be reported at the time.

Today is different. Everything is reported today as a way to offer fair credit information and ratings. It is also the reason that paying your debts on time will help improve your credit history; therefore, your credit score.

It is never too late to start paying your debts on time. If you have suffered a financial setback such as a bankruptcy or poor payment history, without the need for bankruptcy, just start going back to paying your debts on time.

How the Strategy Works

  • Set up automatic payments for all debts, when possible.
  • Use a calendar, either a desk or an easily accessible calendar to mark when bills are due.
  • Pay all bills three days or two weeks in advance of the due date depending on the bill type.

This strategy works on the budget concept. You are able to make the payments on time because you have a very strict budget. You have allotted for when your income arrives in your bank account and when you need to pay your bills.

It also works by setting up payments in advance, at least three days prior to the actual due date to account for any weekend or any delay in payment acceptance. For example, if you have an IRS debt with an installment agreement, you cannot tiY to pay on the same day as stated in the agreement. It doesn’t work.

Even the IRS requires more than a few hours to process payments. It is far better to give a lead time of a week to make the payment if you are setting up payments via ACH to ensure they come out on the right day.

Automatic ACH payments will be drawn on the day you set them up, which makes it the company’s responsibility to withdraw on the day you specified. However, if the payment is ACH but you go in to set it up each month, you have to provide lead time. It may not make sense, but you have undoubtedly seen the blacked out dates, such as the day you are trying to make a payment due to the lead time issue.

For individuals who still send checks to certain companies, you want at least two weeks’ lead time.

Budgeting for on time Payments

  • Know when your money is coming in.
  • Set all your bills around your income versus the due dates.
  • Pay everything you can for the month, while leaving yourself fuel, grocery, and miscellaneous money for expenditures.

If you set your bills around receiving your income you are more apt to pay the bills on time, not spend the money you need for the bills and improve your credit history.

Your credit history will only improve over time and based on when your creditor will report to the company. Most companies report every three to four months versus each month. Some companies will average what has occurred rather than attempt to put in every little detail.

If you are late one out of three months then you might not see a ding to your credit at all. However, if you are continuously late or missing payments, then it is reported as accurately as possible.

The way reporting occurs gives you a chance to improve your credit history over time by consistently being on time with your payments and ensuring that the old late/missed payments fall off.

Key Points

  • Set up as many payments as possible for automatic withdrawal.
  • Have the funds removed at least three days before the bill being due or two days after you receive your income.
  • Pay your bills first, then budget for groceries, fuel, and incidentals.
Steven Millstein

Steven Millstein

Steven is a Certified Financial Planner (CFP) and Certified Credit Counselor (CCC) and joined CreditRepairExpert in June 2016 as a Credit Repair Adviser to continue his mission of making a difference in the world. Everyday, Steven speaks with individuals and families in the online credit repair community to answers questions and offer help people on their journey to repair their credit rating. If you have a story idea for Steven or you would like help with credit repair, please email him at
Steven Millstein