Carrying high balances on credit cards hurts your consumer credit scores and costs you in high interest fees. If you fall behind on credit card payments, you have a number of options. Public and private debt management resources are available. When determining which option is right for you, look at your complete credit history and make a determination accordingly.
Financial Expert Suze Orman
Suze Orman warns debtors to pay above the minimum payment every month. It would take a debtor over 30 years to pay off a $5000 balance billed at an 18 percent interest rate paying only the minimum each month.
Orman also stresses the importance of paying off higher interest credit cards first, and then the rest in descending order. Paying off higher interest credit cards first frees up more money and provides the greatest savings in interest fees.
Federal Trade Commission
The Federal Trade Commission advises debtors to develop a realistic budget and then stick to it. Tracking your purchase patterns is a helpful way to eliminate extraneous spending. If, after developing a budget, you still cannot make ends meet, contact your creditors and request a modified payment plan that reduces your minimum payment to a more manageable level. Debt relief programs can assist you in solving your financial problems. Common options include debt management plans and debt settlement programs. Debt management plans allow you to make deposits, which are then forwarded to your creditors. Debt settlement plans offer a way to settle debts for a lesser amount.
Kiplinger Money Magazine
The rate at which you use credit cards, known as the card utilization rate, significantly impacts your consumer credit scores. Kiplinger, a money magazine, warns against maxing out your cards. Keep card balances within 30 percent of your credit limit for the greatest boost to your consumer credit scores. Credit utilization makes up 30 percent of your consumer credit score.
MyFico Website
When establishing new credit, the MyFico website says to do your rate shopping for a given loan within a focused period of time. Inquiries for many new credit lines hurt your score, whereas a search for a single loan does not. As you open new accounts, pay them off on time and check your annual credit report every year for incorrect or incomplete information. Request one free annual free credit report through the Annual Credit Report website. Dispute incorrect credit information through the major credit bureaus.
0 comments:
Post a Comment