Clearing your debt is agreeing with your lenders to pay back what you owe them. Suppose you are thinking about clearing that debt, then you have failed to make several payments that affect your credit. Your credit is already affected if you have uncleared debts. Research states that 40% of the credit varies with the amount you owe other accounts. Late payments also affect the credit since lenders will report it to the credit bureau. This article will discuss steps that will ensure your debt does not affect your credit.
Clear Your Bills on Time
This is among the most important things to consider if you want to have excellent credit. It is important to clear your bills on time, especially if you own a car loan or an account in perfect shape. To achieve this, you should clear all bills such as water, internet, and rent. It would be great to make timely payments. If this seems overwhelming, see what types of discounted rates you can get on bills, like internet and rent. You can also break down payments even further to create a minimum payment you are comfortable with. You might need to do a little negotiating, but it will help you keep on top of your bills and keep your credit score high in the long run. If you have credit card bills to keep up with, make the payments right away to avoid them piling up.
Do Not Close Your Cards at Any Time
It is not advisable to create new credit accounts while trying to boost your credit. However, keeping your accounts open will help to enhance your credit rate. This is because you have more credit at your disposal than you are using. Use your credit card on large purchases you know you will be able to pay back as well. Being smart about your credit card use will allow you to build your credit even more. Making any mistakes regarding credit cards can end up negatively impacting your credit score.
Become a Verified User
It would be great to talk to your family or friends about the idea of putting you as a verified user in one of their established cards. This move will enable you to have some positive history you had misplaced. But it would be great to do this only when you settle all debts. You want to show your friend or family member that you will be a responsible user on their card.
Debt consolidation is the process of applying for a new loan to clear out other costs and arrears. These many debts join to form a big loan with favorable paying terms. It has advantages like:
- Smaller interest
- Little monthly rates
Suppose you are struggling to clear any form of debt. You can look for a loan to put those debts in one loan and clear them. There are many forms of debt consolidation like credit cards, loans, and HELOCs.
Get Credit Counseling
If you still find yourself drowning in debt and having a hard time keeping up with payments, you might want to consider credit counseling. Professional advice will be your best option. A financial advisor can help you understand the best decisions for your unique financial situation. They will help you set a realistic budget for yourself and give you guidance on making payments. If you think this type of service would help you the most, find someone in your area who is reputable and you can put your full trust in.
It is hard to live a life free from debt, but you should make sure you clear all debts on time to prevent any adverse effects on the credit rate. The above article has tips that will help you achieve this. Some of these tips include clearing your bills early and being a verified user.
Emma is a freelance writer based out of Boston, MA. She writes most often on health and education. When not writing, she enjoys reading and watching film noir. She recommends looking into debt consolidation to improve your credit and reduce being overwhelmed by finances. Say hi on Twitter @EmmaSturgis2