Ready for a few no-fluff tips on cleaning up your credit? Listen, I realize we’re all busy, so I wanted to give you a few quick tips for cleaning up that credit ASAP!
Make Up Your Mind. In order to clean up your credit now and avoid falling into the same trap once you’re out in the real world, you’ll have to make up your mind now that you want to live a different life and moreover that you deserve to live a life of abundance; not one in bondage to material possessions. Decide today that if the average American lives paycheck to paycheck, you resolve to be abnormal.
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Write ALL of Your Debt Out. List each debt you possess along with its current balance owed, interest rate and minimum monthly payment. Once you see it all written out, you can 1. Get over the initial shock and 2. Prioritize which debts you want to tackle first.
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Stop Using Credit Cards! If you continue to add to the debt, how do you expect to get out of it? When you use cash, it makes you think a lot harder about whether your purchase is really a necessity. Cut up those department store credit cards and put a major one in a safe place for an emergency or opportunity. DO NOT call the credit card company and close them or you may erase some good history. Remember your credit history makes up some 30% of your overall credit score.
Know your due date. Late payment fees can cost you an average of $40 per month. This is a complete waste of money! If you’re not cutting it with making payments on your own, automate your payments and make sure you have a cushion in your account to handle the unexpected scenarios life is sure to throw at you.
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Negotiate Lower Interest Rates. Honestly, you don’t have time to be scared of your creditors. Call a customer service representative ASAP and convince them to lower the interest rate by at least 25 percent. If you’ve made most payments on time and don’t have any negative history such as returned checks, you’d be surprised at how many credit card companies are willing to work with you. They’d rather work with you then take the chance that you default and not pay them at all! And, hey, even if you had some hiccups in the past, at least call and see when you’ll be eligible for more favorable terms. Knowledge is power; ignorance is expensive! (Yea, go ahead and tweet that.)
Balance Transfer When Appropriate. Transfer high interest credit cards to other cards which may be offering 0 percent interest for a specified period of time. Record when that time is up, in case you need to shift that balance elsewhere, but be careful to not make this strategy a way of life. The point is to help you get out of debt by utilizing the least amount of money out of your pocket as you possibly can. Credit bureaus get hip to the balance transfer game, so please don’t over do it and say I told you to!
Pay More than the Minimum. The minimum payment is set up for you to carry this debt for as long as possible. As I’ve explained before, banks are a business – not a charity. By sheer design, their goal is to make as much money off of you as possible. By paying more than the minimum, you can cut the interest and principal down much faster. Determine a number over and above the minimum payment you can dedicate to your debt elimination each month. Keep paying that dollar amount toward one debt at a time. You’ll begin to see progress much faster than spreading it out over several debts.
Until Next Time,
Seek Wisdom, Find Wealth & Be blessed!
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