One of the key elements to getting a mortgage or other large loan is your credit rating. The better your rating, in general, the better chance you have of getting a loan at an attractive rate. One of the best ways to establish a good credit rating is by paying off your bills in a timely manner. Good reports from many small creditors such as department stores and utility companies can add up over time to great numbers on your credit score when you need it most.
Keep Your Debt Small
Some emergencies are inevitable, such as medical bills and car repairs. While you may not be able to avoid all debts, consider your income when you use credit cards and spend disposable income. The latest sale on designer shoes might garner you the perfect pair of pumps, but if you're paying for them for months they're hardly worth the fashion impact they make on the occasional night out.
Organize Your Debt
Make a list of your outstanding bills and put them in order of the highest to lowest interest rates. Make the bills with the highest rates the biggest priority on your list. Pay the minimum amount on all your other bills while you pay extra on the top bill on the list. Once you pay this bill off, move your priority payments to the second bill on the list. You'll save more interest charges and end up paying less money in the long-run.
Pay Bills Online
Set up online bill payment plans for as many of your debts as possible. The easier you make it to pay your bills, the more likely it is that you'll pay them early or on time. It's much simpler to click a couple of buttons on a website than to get out a checkbook, envelopes and stamps for paying bills through the mail.
Pay Bills Weekly
Pay one or two bills every week instead of sitting down to pay everything once a month. If you pay a bill right after you get paid each week you're less likely to spend what looks like extra money in your account. Keeping hundreds of dollars in the bank for a month just waiting for bills can be a temptation to overspending. If you don't have the cash on hand because you've already paid a bill with it, you can't spend it.
Contact Creditors
Call your credit card company to try to negotiate a lower interest rate on your credit cards. Many companies are willing to lower their rates in the hopes of getting timely payments in return. Once you have a lower interest rate and minimum payment, keep paying the higher amount each month. This will lower your debt and help you to pay off your card faster.
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