How to Get Out of Debt to Raise a FICO Score

Most consumers carry debt from mortgage loans, auto loans, student loans and credit cards. However, debts such credit cards can harm your FICO score if you carry a large balance. Thus, it's wise for you to keep these debts to a minimum. Paying down your credit cards increases your available credit, and as your available credit goes up, so does your FICO score. Debt doesn't have to linger. There are several ways to quickly eliminate outstanding balances and raise your credit score.

Instructions

1

Bring in extra income. It's difficult to eliminate debt when you're living paycheck to paycheck. Explore ways to earn extra money, such as getting a job on the weekends, or asking your boss to let you work overtime. If you have special skills or talents, turn them into a side business. Put all your extra money toward getting rid of debt.

2

Get rid of credit cards. Don't close out your accounts; that decreases the length of your credit history, which damages your score. Instead, cut them in half or remove them from your possession. You're less likely to accrue additional debt when credit cards are inaccessible.

3

Use whatever extra money you have to pay down your debts. Rather than spend the extra $300 a month you have on entertainment and shopping, use this money to knock down the balance on your credit card. Consistently making higher payments helps get rid of debt faster.

4

Ask credit card companies to lower your interest rate. A lower rate decreases the amount of interest you pay on a credit card. In turn, the majority of your monthly payments will help bring down the principal balance. A lower balance equals a better credit rating.

5

Take money from your emergency funds. High-interest debts can linger for years. Tap your personal savings, if applicable, and use this money to eliminate debt and raise your FICO score.