Thank you for your question about how paying on your debts will affect your credit score.
Your credit score is determined by many different factors, such as the size and variety of your different debts, your payment history, how much of your available credit you use, and the number of credit accounts you have. Because I don’t know the specifics of your credit profile, I can’t tell you how many points your score will fall, depending on what choice you make to repay your debts. For instance, if you own a home and you make your mortgage payments on time, your credit rating will suffer less damage if you have a problem with a credit card account than if you are a renter with the same credit card problem.
One thing is for sure, if you make a late payment or pay less than the minimum required monthly payment, your creditors will report that information to the credit bureaus, harming your score. Any payment that is less than your required monthly minimum can result in your being reported as delinquent to the credit bureaus. I think that the only way to avoid any damage to your credit score is if you can get your creditors to agree to accept a smaller payment for one month. The best case scenario will be if they are willing to take a smaller payment and not report you as delinquent. The only way to find out if your creditors will offer you any flexibility is for you to speak with them.
In general, it is prudent to maintain open communications with your creditors. They are not required to work with you as you want them to, but there is no way they are going to be flexible if you don’t request it. Call each creditor and explain that you are in a short term financial crunch and that you want to make one payment that is less than your required minimum payment without your being reported delinquent to the credit bureaus. The replies you receive will dictate your next steps.
If each creditor cooperates, then your credit will not be harmed, as long as you catch up the following month. If one or more refuses to cooperate, then you will have to decide whom you will pay on time and whom you won’t. You should attempt to keep as many accounts in good standing as you possibly can.
Other possible solutions to look into are borrowing from a retirement account (if you have one), taking out a cash advance on a credit card, or taking out a short term loan from a family member or friend.
You may want to get a credit report with a credit score, if all your creditors do not cooperate with your plan. That way, you can see what you credit score is now and how many points it drops. If you are unable to avoid harming your credit score, make sure to take the right steps moving forward to improve your credit score.
A final item to keep in mind is that your creditors can hike your interest rate, if you do not pay as agreed. A severe hike in interest rates could make it hard for you to properly manage your debt load. If this happens, I recommend that you speak with both a Consumer Credit Counseling service and a Debt Settlement firm, so that you can review the different options for resolving a debt problem.