Need to Improve Your Credit? Start By Lowering Your Debt

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Paying your creditors on time each month is an excellent way to improve your credit score.

Timeliness makes up 35% of your credit score, and when you pay on time, this triggers positive activity on your credit report. But paying on time isn?t the only influencing factor.

Some consumers don?t realize the damaging effect of owing a lot to their creditors. As a result, they max out their credit cards, take out several loans or keep their credit card balances near the limit. In addition to paying on time, you need to pay down your consumer debt.

Need to Improve Your Credit? Start By Lowering Your Debt1. Pay more than your minimum.

If you have a credit card, paying only the minimum each month is one way to stay in debt. Creditors are satisfied with minimum payments. But if you owe a lot of money, it will take years to pay down the balance.

You?ll pay extra interest over the life of the balance, plus excessive debt lowers your credit score. Change your mindset and aim to get rid of debt faster. Rather than pay the minimum, pay an amount that?s two or three times your minimum.

This method puts a dent in your balances faster, and helps get rid of debt in less time.

Side note: If you are looking to increase your credit score, you can start off by?checking your free credit score through Credit Sesame. They provide free credit scores so that you can see what areas you should be working on. Yes, it is actually free!

2. Save money around the house.

Maybe your monthly recurring expenses make it difficult to pay down debt. In this case, you?ll have to modify your spending and free up cash. This is easier said than done, but very possible.

Taking measures to reduce energy costs and other utilities around the house can help. For example purposes, let?s say you live in Brock Texas. If you deal with high electricity costs, you might compare rates with other energy providers to save money. You can also save money around the house by using coupons, comparison shopping before making a purchase and reusing items.

The money saved can go toward your debt.

3. Stop charging.

You can?t pay down debt if you keep using your credit cards. Make cash your friend and give your plastic a break. This might call for drastic measures, such as cutting your credit cards in half.

Removing credit cards from your wallet can reduce impulse spending, thus reducing new charges on your credit cards. Some people cancel their credit cards when they?re ready to pay them off. This move, however, isn?t recommended.

Canceling or closing cards can reduce the length of your credit history, which can possibly damage your credit score.

4. Don?t blow extra cash.

Give yourself a budget or create a monthly spending plan. This keeps you on track, wherein you avoid overspending and going in the red each month. It?s okay to have fun, as long as it?s in moderation.

At the beginning of each money, decide how you?ll spend your cash. How much will you devote to bills, recreation and miscellaneous expenses. Be practical and realistic. Cut back on extras (dining out, coffee breaks, entertainment, vacations) to free up cash for debt repayment.

Don?t forget to set money aside each month for savings.

Getting out of debt can be tricky. But with a plan and self-discipline, you can pay down your balances and take control of your finances.

If you are interested in credit repair,?there are professionals out there who will work towards improving your credit so that you can get approved for loans, receive lower interest rates (and save thousands of dollars), and more.?CreditRepair.com?will help you create a game plan to improve your credit score, they will contact credit companies directly on their own, they will communicate with the credit bureaus to work towards making a change, and they provide an online dashboard that will help you monitor everything that is going on. It is all very affordable and will most likely save you thousands in interest fees and late charges.

 

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