From a very young age many of us are taught the importance of being on time and that arriving late is a sign of disrespect. As we grow older, we become more lax. We love staying up late past our bedtime, we learn it's expected to be fashionably late for parties and no matter how late we get home from work, we no longer worry about missing our favorite TV shows thanks to the DVR.
As we lose our respect for time, we lose our sense of responsibility. We arrive perpetually late to appointments, sleep in whenever we can and pay our bills past their due dates. We know the ramifications of making a car or credit card payment late, but it seems people are less concerned with paying their rent on time. As many young college graduates move into their first apartments, it's important to remember that being late with your rent can cost you more that you realize.
THE CASH FLOW DILEMMA
Unexpected expenses often seem to happen right around the first of the month when rent is due. You get a flat tire, you break your cell phone, or your laptop is stolen. Many people think it's OK to put off paying the rent to cover these expenses. But the consequences can be far-reaching.
• The Fees Add Up
Late fees can be a real killer, and they add up fast. According to the tenant ordinance mandated by my hometown of Chicago, landlords are allowed to charge a base fee of $10 per month for late rent under $500. Plus 5 percent of the dollar amount that exceeds $500. So if your monthly rent is $1,200, your landlord can charge an additional $35 (5 percent of $700). That's $45 in late fees which can be enforced as soon as six days after the rent is due.
• Your Credit Score Goes Down
Most people don't think that being late on rent will affect their credit score. But, just as with mortgage lenders, landlords can report late payments to credit bureaus. And you're particularly vulnerable if you are paying rent to a Property Management Company. They regularly report late payments to credit agencies, so it takes just one late payment to drop your score, but years to build it back up.
• A Bad Reference Could Land You Back In Your Parent's Basement
More and more landlords are insisting on references from past landlords. If you are perpetually late with rent payments and you have to move to a new neighborhood or city, a bad reference could cost you a place to live. Plus, it's the norm for landlords to run a credit check. Bad credit combined with a negative reference usually means you're not getting the apartment.
THE SIMPLE SOLUTION
Luckily, staying on track with your payments is much easier now than it has been in the past. Today's technology can help assure you'll never be late with rent again. There are dozens of free budget monitoring applications that you can download on your smartphone. These apps can be linked to your credit cards and keep track of your spending activity. They can also remind you when your monthly bills are due. Or you can set up a free electronic rent payment service that can regularly schedule the payments for you each month, eliminating the possibility of lateness. You can have the amount deducted directly from your bank account or if you're a little short one month, have it charged it to your credit card. If you're goal is to eventually own a home, you're going to need stellar credit, now more than ever. So get on track, stay on track, and don't let a few late rent payments destroy your future plans -- it's just not worth it.
Jeff Golding is the President of WilliamPaid, a free, online rent payment service that allows users to build credit history by simply paying their rent on time.