If you carry balances that are close to your limit on credit cards or loans, your score suffers. Having a small credit card with a $500 limit and $500 owing on it WILL HURT YOUR SCORE. This is another reason new credit often temporarily hurts your score - you have NEW credit and it is at your limit.
Do everything you can to pay down balances, especially on credit cards. You will save money and improve your score!
Here are few things to consider doing:
- Make additional debt payments of $5 to $100 or whatever you feel comfortable with over and above the minimum payment.
- Start with the bill that has the highest interest rate first to attack.
- After this first bill has been paid off, take the minimum payment you would pay on that bill and pay it on the next bill which has the second highest interest rate. Once again, make additional debt payments of $5 to $100 over and above the minimum payment.
- Stop adding NEW charges! You will be able to conquer your bills faster than you think and will soon see your bank balance grow.
- Pay your bills online so you can have an accurate record of all of your payments, dates and the exact transactions that were made. Not only will this give you good records to dispute incorrect credit reporting information but it will also show how fast you are actually running the race to being debt free. Paying online also allows you the ability to easily make extra payments throughout the month. Waiting until the account due date can make it difficult to save for an extra payment on the account.
- Consolidate student loans. This can be one of the most effective ways to improve your FICO score dramatically. Just a few additional points on a FICO score can literally save tens of thousands of dollars over a lifetime by locking in low interest rates on houses, cars, and other items purchased later with credit.
Check back soon for Part 4 of the Improve Your Credit Series. Click here to view previous series posts.
Dan Anderson
CarManDan
Moorhead, MN Fargo, ND
New and Used Car and Truck Expert
Moorhead, MN Fargo, ND Used and Car Dealer
