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3 Huge Tips to Reduce Credit Card Debt |
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These tips may seem like common sense, but to those people with a lot of debt, they can be more than a little difficult to follow. Start with the one you think you can handle, then slowly move up to the more difficult ones.
1. Pay your bills on time
This seems like a simple concept, but poor organizational skills and spending habits can prevent you from doing this. Late payments will hurt your score tremendously.
If you think you will be having a problem paying a certain bill, contact the creditor and explain the situation. They will most likely be willing to work out a payment plan with you without reporting a late mark on your credit report.
The goal here is to develop a long history of paying on time.
2. Live on a budget
If you don't have one yet, start one today. Following a budget cures overspending.
3. Have 1 credit card
Try to hold on to 1 credit card and pay it off every month. This will help establish good credit history. Cut up all your other credit cards including gas cards, store cards and others. This is a must.
4. Keep card balances low
If you need more than 1 credit card, try to keep your balances to a minimum. Avoid a high debt-to-credit limit ratio, which can lower your score. This goes for all your accounts.
5. Avoid playing the balance transfer game
This is so tempting, and I did it for a long time. By transferring balances too often, you can lower your score. Too many revolving credit accounts is seen as a negative to the credit reporting agencies. Even if you close them after you're done with them, it still can damage your score.
By doing this, you are pretty much delaying the inevitable, which is defaulting on one or more accounts. Shifting your debt around never removes it.
6. Don't go crazy opening new accounts
If a lender sees a bunch of new credit inquiries or several accounts opened up in your name in a short amount of time, you may appear to be soon overextended and perhaps a bigger risk. This goes for all credit and loan applications, like mortgages and car or boat loans.
7. Check your credit reports at least once a year
Review it carefully to make sure your accounts are being reported accurately. Dispute inaccurate and unverifiable negative items. Don't worry about checking your own credit report often. This doesn't affect your score.
8. Maintain Stability
Maintaining a stable lifestyle is one the biggest factors in improving your credit score.
Lenders prefer that their clients have a history of being employed by the same company for a few years and don't move around too much. This says to the creditors that you are a lower risk, thus your chance of getting a great interest rate will be much better.
The ingredients in maintaining a stable lifestyle are pretty simple. Here are the major ones:
- stay employed
by the same employer for at least 3 years
- live at the same address for several consecutive years
- don't open new credit or loan accounts frequently
- have a long record of on-time payments
Wait! - Don't despair!
When all else fails, time is one of the only things that can be on your side when it comes to improving your score. A long credit history is viewed as a positive thing, because you present yourself as a known quantity to the potential lender.
The law is also on your side, because it requires that the credit reporting agencies to stop reporting your negative marks after seven years, with bankruptcy being the significant exception, staying on your report up to seven years.
Stick with it!
Remember - time is on your side when it comes to healing your credit. Keep doing the following as you pull yourself out of debt:
After you've cleaned up your credit report (or had a reliable credit repair agency do it for you), the best lifestyle change you can make is to maintain lifestyle stability.
Here's a few extra tips that will help you get your credit score to where you need it.
Although this doesn't affect your score directly, it will help you avoid having to take out unnecessary loans and putting too much on your credit cards. Having extra income will improve your debt-to-income ratio and help you pay your debts faster.
Get a part-time job. Move into a higher paying career (if it's something you like). Keep learning!
Remember, keep at it. and you will start to see progress!
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Having good credit is one of
the most important building blocks to financial independence.
Learn how getting good credit can help your life.
Follow these tips to
maintain a great credit score
Here are a bunch of tips and suggestions that will put your
score at the top and keep it there.
Learn valuable information
about credit reports
Find out about what could be on you credit report, types of
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How to avoid credit repair scams
By knowing what's out there, you can save yourself a ton of
money, headaches and time. Picking the right credit repair
strategy is critical to your financial future.
Improve your
credit score by disputing items on your credit report
By disputing erroneous, inaccurate and
unverifiable entries on your report, you can drastically improve
your score and save hundreds and even thousands of dollars in
interest.
A common question - Is
Credit Repair Legal?
Read my thoughts on the legal and
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Get your free Annual
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Read my review of
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Do It Yourself Credit
Repair
Remove unwanted marks
by disputing them yourself. By applying some basic
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can have adverse entries removed much sooner.
Sample Dispute Letter
Use this sample letter format to dispute
items on your credit report.
Playing the Balance Transfer Game
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Your Debt-to-Income Ratio
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Personal Money Management Basics
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Did You Know... |
49% of adults, and 66% of US high school students got F's on a national test on their knowledge of basic economic principles.
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Food for Thought... |
"I'd rather go to bed without supper than rise in debt."
-Ben Franklin.
