Manage Your Debts and Improve Your Credit with These Financial Tips

June 22, 2017 at 8:33 PM 1 comment

Whether you have accounts past due or pay all your bills on time, most of us have some level of debt. The key to keeping debt from becoming your enemy and ruining your credit is to learn how to manage it. Learn to manage debts of any size and it will become easier to keep up with payments, get rid of negative marks, and most importantly improve or maintain your credit score (for those who already have a good credit rating).  Not to mention the amount of unnecessary stress it lifts from your shoulders.

Get a Grand Total

It can be scary to imagine how much debt you may have accumulated. A mortgage, student loans, credit card bills, and even medical bills can add up leaving an unfavorable impression on your credit report. The only way to effectively manage your debt and improve your credit score is to know exactly what you owe and to whom. Tally up all of your debts and don’t be afraid to look at that grand total. Sure, it may be scary, but knowledge is power.

Get a Look at Your Credit History

You now know how much money you owe your creditors, but what’s your current credit health? Is your credit score declining, increasing, or has it remained the same? Look at your credit report to see what’s going on. Many consumers aren’t even aware of how much is reported on their credit history – and verify the facts because some of it may not be accurate.

If you find negative line items that don’t belong or old accounts that should have been erased from your history it may be necessary to contact a credit lawyer. They can help you resolve inaccuracies and clean your credit report which will most likely improve your credit score.

Create Repayment Plans

You are making progress. Now you know how much you owe, you know who you owe it to, and you know how these debts are positively or negatively impacting your credit rating. The next step is to reduce your debt to income ratio by setting up repayment plans. If you’re in good standing with your debts then start by paying off more than the minimum each month.

On the other hand if you have a lot of accounts and large amounts of debt it is most likely time to get serious about tackling them. Start by contacting your creditors and arranging a payment plan that works within your budget. Be sure that you can stick to the payment plan, as creditors may not be willing to work with you in the future if you break an arrangement. As you pay off the debt your credit score will improve.

Create a Budget

You’ve likely heard this a million times, and yes, the term budget does sound a lot like restriction. Be that as it may, when you properly budget you can improve your credit and your finances. A budget helps to ensure that you have enough income to pay the monthly bills. It also helps to minimize unnecessary spending which can free up cash. To eliminate your debt you will use that excess cash to pay off your bills.

Go Back to Cash

If your credit history is in dire straights your credit card may be to blame. If credit cards have gotten you into trouble with debt stop using them and revert to a cash based system that will keep you accountable. Using cash helps to curb those impulse buys. You will no longer need to worry about charging something that you cannot pay back later. Your credit rating cannot fall any farther and you will prevent yourself from further destroying your credit score. Using cash will help you gain a better understanding of your credit card debt and help improve your credit rating.

No one said that managing your debt and improving your credit would be easy, but, once you get over the learning curve, managing your finances becomes second nature. Simply watch what you spend, keep track of income and expenses, and maintain or build a positive credit rating. If you’ve tried these tips with no such luck, consider talking with a credit counselor who can help you get your finances back on track.

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1 Comment Add your own

  • 1. Jessica  |  August 9, 2017 at 5:26 AM

    Thanks for sharing some useful information about improving our credit and get rid off debt.

    Reply

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