A good credit rating takes a long time to build. You need a solid history of borrowing and paying back money which proves to your potential lender that you’re a safe bet. There are plenty of other ways you can do this too, which you can find here. Unfortunately though, all that hard work can be undone very quickly. While it takes a long time to build a good credit rating, it can take only one missed payment to send it tumbling back down.

Again, there are several factors that may cause your credit rating to drop, ranging from bankruptcy, to having a county court judgement against you or being a victim of fraud. But while these scenarios may be unlikely for the average person, there’s one situation that can happen to anyone: missed payments. Just one missed payment on a phone bill, amenities contract, mortgage or loan can have a detrimental effect on your credit rating and undo all that good work you’ve done. In fact, a missed payment will stay on your credit rating for as long as seven years

So with the view to helping as many people as possible keep their credit ratings high, here are a few tips to avoid missing payments:

All Your Contracts Count

Don’t fall into the trap of thinking that it’s only your payment schedules with the bank that count towards your credit rating. In today’s joined up world, it all matters. So your phone contracts, your car finance, your electricity bill; if you have an agreement with a company to make regular payments over a certain time period then the contract has been agreed based on your credit rating – and it will hurt your score if you miss a payment.

Tally Your Outgoings

Go to the bank for a loan or mortgage application and the first thing they’ll do is look at your regular monthly spending. First step is the list of direct debits going from your account. It’s a useful exercise. Do you know exactly how much goes out each month for your phone, your gym membership or that store card? Having an idea of this can show you how much you have left each month, and importantly, help you decide whether you can afford to make any further long term spending commitments. (It might even be worth

Consolidate

If you have multiple direct debits leaving your account(s) each month, it can be hard to keep track of what’s going out when, and all too easy to forget about a payment that’s due. So once you know exactly what your spending is each month, it might be worth seeing if you can cluster as many of the payments as possible together. Most phone contracts, council tax bills etc. will let you change your billing date. It’s a good idea to choose a billing date that comes directly after your salary comes into your account – that way you’re giving yourself the best chance of making all your payments.

Check Your Overdraft Settings

It happens to everyone from time to time: you’re running low on cash and a scheduled payment takes you beyond your overdraft limit. For some bank accounts this means the payment will fail, resulting in a black mark on your credit rating. However, these days many accounts do give you the chance to enter into an unarranged overdraft. You may face a charge for this, but the payment is made, which means you avoid missing a payment and hurting your credit score. A word of warning here though – don’t make this a habit, as entering an unarranged overdraft too often also hurts your credit score.

Have an Emergency Stash

We know – easier said than done. But putting a little aside – perhaps in a separate account or perhaps in a jar under the bed – can make all the difference when the bills start to pinch. You’ll get a psychological boost as well from knowing that there’s a little extra cash in the background should you need it.

Looking to build your credit rating? Did you know that if you are renting, you can build your credit rating simply by paying your rent on time each month? Find out more and sign up to Credit Builder here.