This simple factor is 35% of your credit score. It demonstrates your level of financial responsibility. You may not think the couple of dollars difference on your water bill from paying on time to paying the increase after a certain date hurts much. It does. It creates a habit of slacking financially which can lead to real trouble down the road.
A lower credit score can affect your ability to purchase a home or car, and it can make the difference between a good interest rate and a bad one. Interest is the amount you pay that is above what you borrowed just for the privilege of borrowing money. For instance, on a $1000 loan, you may make payments of $110 each month with just $10 each month in interest, and at the end of your loan you may pay back $1200. If you have a poor interest rate, however, you may make payments of $130-150 a month, and for that same loan you’ve paid $500 in interest instead of $100.
If you have to choose between what to pay, you need some financial counseling to help you make the best decisions and get out of that situation. If you have a great history of paying on time and a bill slips by for just a day or two, call and ask (sweetly and taking full responsibility) if they will waive the late fee. They may keep that mark off your record and save you a few bucks if you have demonstrated faithfulness in paying in the past. It never hurts to ask.