What Should I Pay First: The Mortgage or Credit Cards?

Unemployment or unexpected bills for medical problems, household emergencies and other unavoidable expenses mean you must make difficult choices if you do not have enough money left over for your regular expenses. Your mortgage maintains the roof over your head, but neglected credit card bills can result in cutoff credit lines. Unpaid home loans and credit cards both result in collection calls. You face a difficult decision about which to pay first if you cannot afford both.

Time Frame

Base your choice of bill payments on the time frame for drastic consequences. Mortgage holders tend to take action against you quickly, while credit card issuers typically wait several months before engaging in aggressive tactics, according to MSN Money writer Liz Pulliam Weston. You could face foreclosure in as quickly as three to four months if you stop paying on your home loan. Banks do not write off credit card debt for about six months, after which it may be sold to a collection agency.

Effects

Late mortgage payments and credit card delinquencies both affect your credit score badly. Both fall into the "payment history" area, along with any other credit accounts. This area is 35 percent of your score, according to the MyFICO scoring site, so late payments on any credit-related bills pull it down significantly. Foreclosure, written-off credit card accounts and collection agency actions all affect this area, too.

Considerations

Credit bureau TransUnion found that many consumers pay their credit card bills before their mortgages, even though they risk losing their homes. In the third quarter of 2009, 6.6 percent of Americans were late on their mortgages but were paying their credit card accounts on time, as compared to 3.6 percent who were caught up on their home loans but behind on their credit cards. People do this because they need to charge everyday necessities like food and gasoline on their credit cards and do not want their credit lines cut off, according to Better Business Bureau columnist Elaine Roxane Winter. Many consumers can afford their minimum credit card payments thereby keeping the accounts in good standing even if they do not have enough money for their mortgage payments.

Alternative

Bankruptcy is an option if you consistently skip payments on your mortgage, credit cards or both and cannot get caught up within a month or two. Tapping into your home equity or retirement savings and making little headway in paying down your debt are signs that bankruptcy may be the best choice, according to Pulliam Weston. You can often keep your home and other assets if you choose Chapter 13 rather than Chapter 7, although you must fulfill a court-ordered repayment plan tailored to meet your financial ability.