Can Automatic Bill Payments Help My Credit Score?

Credit Cards bill payments every month might make a user feel burdensome, as it can be hard to remember the dates. Thus, making autopay options more suitable for a lot of people. Autopay, automatic payments, or just autopayments are synonyms that allow the borrower to make their payments on a particular date which can be the due date of the bill or maybe an earlier date than that.

Automatic Bill Payment Tools can help you ensure that all your bills are paid on time. They also help you by saving you from any damages to your credit by late or no payments. The option of making your payments automatic or choosing autopay over manual payments is an option provided by many banks and credit card issuers so that the borrower never misses a monthly payment deadline.

How can Automatic Bill Payments help your Credit?

Autopayments does hardly make an impact on your credit score unless you are very responsible in paying your bills on time. The autopay is not of much use to the people who are aware of their payment dates and the amount and shows very responsible behavior towards it.

However, the same might not be the case when you are negligent towards the payments. The payments need to be done on time to keep the credit history clean. The thumb rule is that the payment should be made in full which means that making lesser payments can somewhat impact your credit. This might not necessarily will be the case if you are making the payment of the minimum due amount. In these types of scenarios, autopay helps in making your payments every time, which can help you keep your record on track.

But the most important thing is that your account should have enough money for that autopay to go through the payment. Because if you do not have the funds the payment won’t go through and your might be charged with an overdraft fee as well. Even if your bank does not charge an overdraft fee, it is still not a good way to manage your bills.

What to watch out for while using autopay?

The biggest risk factor when you use autopay is insufficient funds in your bank account. When your account through which you have set up the autopay does not have sufficient balance, your payment did not go through. Now once the payment has been stopped, you might be charged an overdraft fee by the bank until and unless your bank does not charge an overdraft fee, it seems to make you pay more from your pocket. So, the best recommendation, in this case, is to always secure the amount of your bill in your account.

There can also be cases when you have excessive money coming into your bank account or you might be running a high car balance for some time (can be some sort of vacation or some extravagant expenses which cannot be avoided). In these cases, it is best to either cancel the autopay or adjust it according to their setting to avoid excessive withdrawals.

One more strategy which you can use to avoid surprise autopayments is to use just one card to make heavy payments and also make sure that the auto payment set with this card is set conservatively or just skip the autopayment part.

Another damage that you can face by opting for autopayments is that you get too relaxed about monitoring your accounts for suspicious activities. You will need to understand the importance of reviewing your credit card bill and statement checks for any errors or activity you don’t recognize.

While autopay can make you lethargic on checking over your credit status, your credit can get significantly disturbed by any wrong or false entry. You need to periodically check your transactions and bills to avoid any unnecessary hassle and if you find any error, you will have to report it to the credit bureau because it cannot only impact your credit report but your credit score as well.

Bottom Line

Autopay can help you avoid any late payments and non-payment issues which can directly affect your credit health and credit score. Autopay is an option provided by most banks to all their customers. This feature of payments can become quite helpful if you think that remembering the due dates of your bill are too much for you. You just need to make sure that your bank account has a sufficient amount and after that, you are good to go. Autopay might make you lethargic to check your credit details which might result in some errors. These errors can make a significant impact on your credit health altogether so it is also important to check the report every time. Autopayment otherwise is a great method that can help you keep a great repayment history.