We all know how important it is to pay off our creditors, but sometimes we just need that extra reminder. Spoiler alert: it will only help you in the long run.
More important than simply paying off our debts is having our basic necessities met, first and foremost. However, as time progresses, we should begin to set goals for how we can repay the bulk of our debts in their entirety, for the reasons mentioned below.
And the great news is that it doesn’t have to be something that’s so far from reality.
5 additional reasons for you to pay off your debts on time
1. Grow in your financial security.
It would not be a stretch to consider financial security, meaning the general peace of mind you feel without constant fear or concern for how you will cover your basic necessities, as a means of obtaining the so-called “American Dream.”
Nonetheless, financial security for many seems like no more than a dream or an unattainable goal. One of the biggest challenges to financial security is an overwhelming amount of outstanding debt.
It is challenging to put money away into your savings when it is eaten up every month by your creditors. The sooner that you can pay off your debts, however, the sooner you can work to develop your emergency fund. You can also work towards saving for other things including but not limited to: your retirement, your education, your children’s education, vacation funds, and much more.
2. Live a more stress-free life.
Financial security and mental health are very closely related as well. With mental health being a focus amidst the pandemic, it becomes increasingly important to learn your stressors and how to cope with them.
Having large accumulated debts can be one of the most stressful things in your life, as you spend time worrying about how you will pay off everything. The sooner that you can pay off your debts, the sooner that you can be set free from this concern.
3. Boost your credit score.
Your credit score is broken up into the following sections: payment history amounts owed, length of credit history, new credit, and credit mix. The largest factors that determine your credit score are your payment history and amount that you owe.
That means that if you want to improve your credit, place a focus on making on time payments, as well as making an effort to pay off a larger chunk of the balance you owe to your creditors.
4. Dodge annoying communications from your creditors.
When you have an account in collections, it’s likely that you are receiving multiple phone calls every day, week, and month reminding you to pay off your debts. If you have caught on to this, you’re probably even avoiding the phone calls.
The Consumer Financial Protection Bureau (CFPB) approved new rules that limit how often debt collectors can contact debtors — seven calls a week, per account that is in collections.
This could be great news for debtors, however the rules also authorized debt collectors to reach out to debtors through social media. Initial contact requires debt collectors to immediately identify themselves, and it can only take place through a private form of messaging. Debtors have the option to opt out of such communications.
While this can seem a little far-fetched, it is not too surprising considering how many people use social media on any given day. That being said, even with the phone call limitation, it might prove even more challenging to avoid contact from your creditors.
5. Access better rates on loans and the like.
There is nothing like paying off your debts to gain access to even more debt. It seems counterintuitive, however the sooner you can pay off your creditors, your credit score can improve, which means that you will have access to other loans at a more favorable interest rate.
Such loans can include a mortgage for a new home, the purchase of a new vehicle, or perhaps even schooling for yourself or your children.
If you have the means to do so, a good step that you can take is to pay off your debtors as soon as you can. This is inclusive of making payments on time, but the sooner that you can pay off your creditors, then your interest will also be lower and you’ll be paying less in the long run.
If you find yourself in a pinch until you are able to pay off your creditors, Denefits is a helpful tool. The software allows you to be instantly approved for finance contracts, regardless of your credit score, and all payments are reported to the credit bureaus, which will further improve your score.
Learn more about how Denefits can help you attain financial security today.