How to Get Rid of Old Debt

When you allow old debt to sit on your credit report, it makes you look bad in the eyes of potential lenders. Some employers will also check your credit history before making a decision to hire you. It is best to be proactive with old debt. Instead of sitting back hoping it will go away, do something to make it go away. By doing so, you improve your credit score and your chances of obtaining future credit and future employment.

Instructions

1

Order a copy of your credit report from all three credit reporting bureaus, Experian, Equifax and TransUnion. Your credit report will tell you exactly what debt needs to be paid and the amount of the debt. A free report can be obtained, once a year, from the Annual Credit Report website.

2

Create a list of all of the old debt that needs to be paid off. Organize the debt from the lowest amount to the highest amount. Add the names and contact information relevant to each company you owe.

3

Determine the amount of money you are able to pay each month towards the debt. Contact all of the companies you owe. Advise the company representative that you would like to setup payment arrangements.

4

Start paying small monthly installments on all of the debts. When paying the debt, the goal is to pay off the lowest debt amount first. For that reason, make higher payments towards the lowest debt.

5

Take the money that you set aside to pay off the lowest bill, and add it to the monthly payment for other bills. This is referred to as the "snowball" effect. Every time a debt is paid off, continue using the extra money towards the next debt. Do this until all of your debt is completely paid off.