How to Eliminate Credit Card Debt Without Hurting Your Credit Score

Owing a large credit card debt can hurt your credit score. If your debt-to-income ratio is too high, your score will be low. The best way to eliminate credit card debt without hurting your credit score is to create a plan to pay it off. Not paying your balances, paying late or filing for bankruptcy protection would leave a negative mark on your credit score that could take years to remove. Your payoff plan may include paying one card at a time, transferring balances, settling or bringing in extra income for quicker payoff.

Instructions

1

Devise a plan to pay off each credit card, one at a time. Use the snowball method where you pay off the cards with the lowest balance first or with the highest interest rate. By creating a plan for paying off the cards, you'll eliminate the credit card debt; know how much to pay each month and feel a sense of accomplishment after each card is paid off.

2

Transfer balances from multiple credit cards onto one card with a low interest rate. Many creditors offer promotions for balance transfers where the interest rate is very low on the transferred balances until a specific date or until the balance is paid off. This allows you to apply dollars you may have spent on interest toward the balance.

3

Enter a settlement arrangement with the creditor where it agrees to settle for a portion of the total balance. Settlement is a negative mark on your credit report so ask the creditor to list the account as "paid as agreed," which is more favorable than settled or charged off.

4

Bring in more income so you can pay off your credit card debt faster. Take a second job, work overtime or freelance for extra income. Apply this income to your credit card balances and stop spending. If you pay large amounts toward your cards without incurring new debt, you will raise your credit score.