How to Reduce Outstanding Debt on Your Credit Score

According to Myfico.com, outstanding debts make up 30 percent of credit scores. Consumers hoping to add points to their personal score and qualify for better interest rates on loans should pay down their credit card debts and existing loans. Reducing outstanding balances is often a lengthy process. But with a plan and self-control, you can get rid of balances.

Instructions

1

Settle debts sooner with higher monthly payments to your creditors. Use disposable income to pay two or three times more than your minimum payment on credit cards and other loans. You will pay off the balance quicker and reduce how much you owe in interest.

2

Inquire about reduced interest rates on credit cards. Simply asking your creditor for a rate decrease can result in paying less interest on your credit cards. This slashes the amount you owe in interest each month and speeds the reduction of your principal.

3

Pull out your credit cards only in an emergency. View your credit cards as a last resort and pay for items with cash to stop accumulating high balances.

4

Resolve credit card balances each month. Give yourself limits and only use credit if you have the money to pay off the charge once you receive the statement in the mail.

5

Earn extra money to pay down your outstanding balances. If your salary isn't enough to pay outstanding balances, have a weekend yard sale, take items to a consignment shop, start working a part-time job or do odd jobs around your neighborhood such as babysitting, car washing and mowing grass.