1. Check your credit report.
The best way to start trying to improve your credit score is to examine your credit report. Check it carefully to be certain that all the debts listed on it are actually yours. If you see any debts or accounts listed that aren’t yours you need to report the error to the credit bureau so you won’t be penalized for it. You can obtain a free copy of your credit report every 12 months from each of the credit bureaus- Experian, TransUnion, and Equifax.
2. Learn the details of your credit card debt.
To create a plan to pay off your credit card debt you need to first asses which cards you carry the most debt on. Make a list of the balance on each card and the corresponding interest rate and plan to pay off the cards with the highest interest rates first. If you’re using your credit cards as a means to get by because you’re unemployed, then you need to decipher which cards have a lower interest rate and use those for daily purchases, if possible.
3. “Improve Your Interest-Rate Situation”
If your credit score is too low, you probably won’t qualify for any new credit cards that boast a lower interest rate but it certainly wouldn’t hurt to look into it. Applying for a new credit card temporarily knocks down your credit score a little, but if the interest rate is significantly lower then it’s worth it. If you are approved for a new card, be sure you fully understand the balance transfer fees before swapping your high interest debt over to that card. Make sure the swap financially benefits you in the long run. You could also call your creditors to ask about a lower interest rate or if they can waive the card’s annual fee.
4. Pay off the highest interest debt first.
It will benefit your finances in the long run if you pay off the cards with the highest interest rates first. Keep sending in your payments for the lower interest cards on time, but put any extra aside for the high interest cards. The sooner your high interest debt is paid off, the easier it will become for you to pay off remaining debts.
5. Create a payment system.
A whopping 35% of your credit score is determined by on time payments, so one of the easiest ways to substantially improve your score is to simply pay on time. Add the payment due dates to a calendar and remind yourself to check the calendar regularly. Using an online bill payment system through your bank account can also be a good way to keep track of when things are due. Some online bill payment systems can be synched up with other accounts to send you reminders of when payments are due.
Figure out exactly how much money you have coming in every month and hold yourself accountable for your spending. Holding yourself accountable will also help you figure out exactly how much of your income can be put toward paying off your credit card debt each month.
If you have had problems with a credit card or a credit report and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.
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