Follow these steps to improve your credit:
Here at Darrell Castle & Associates, our experienced Memphis bankruptcy attorneys not only want to help you get out of debt by filing for bankruptcy, but we also want to help you recover from it, which means improving your credit.
First you’ll want to reduce your credit debt. And here’s how:
Negotiate Your Rate
It doesn’t hurt to just ask sometimes. You can reach out to the credit card companies and discuss what options you might have. Some companies offer payment plans. After all, they want you to pay in whatever way you can.
Use Your Savings to Pay Debt
Some people have both a savings account and credit card debt, but they understandably don’t want to dip into their savings.
In the long-term, you don’t want to use up your savings on credit cards. That takes some work, and making a budget can help.
But in the short-term, try to pay down the highest interest debt as quickly as possible. You can use your savings, which draws less than 1% interest, to pay off the cards that are charging an average of 15.61% interest.
Pay the Highest Interest Cards First
Similarly, if you have more than one credit card, you’ll want to prioritize. You should get out from under the most expensive credit card first.
Look at the interest rates and annual fees on all of your cards. Pay off cards with the highest interest first. Try not to miss any payments across all the cards, but put any other money you can save toward that high-interest card. Then, once it’s paid off, do the same with each remaining card.
If you’ve paid off your credit card debt, it’s time to focus on your credit score:
Make Your Payments
Paying your regular monthly credit card payments is the single most important part of any credit score. They expect you to pay your minimum payment or more… every time, and on time.
It’s worth it to set multiple alerts or reminders. This is so critical to your credit score that you should treat it like any other major deadline.
Move Your Money Around If You Need To
One thing that can ding your credit report is to have a credit card nearly maxed out. So, if you have multiple credit cards, move that debt around.
If you make your payments on time and have the financial resources, you can also request a higher credit limit.
Just remember: the best way to use credit is to pay it off in full every single month. That way you don’t pay extra in interest and fees. Moving your money around is a short-term solution. In the long run, you’ll want to cut back on spending with credit as much as you’re able.
Keep Track of Your Credit Score
Everyone has access to their credit reports once per year for free. Get your copy and check it for any errors. Sometimes the wrong name or address can end up on there — and with it, mistakes you didn’t make.
You may also see one late payment tanked your score more than you expected. If you’re typically responsible, but slipped up one time, the bank may be willing to take the late payment off your record.
Lastly, some credit card companies ofter free credit score reports throughout the year. While you should still check your official report annually, those regular updates can help you understand how your score changes and why.
Don’t Let Embarrassment Over Debt Stop You
These steps were formed in response to a National Foundation for Credit Counseling survey which revealed more people are embarrassed by their credit card debt than their age or weight. (It’s important to note the survey was placed on the website’s homepage, so people going to it were already searching for answers on their credit card debt).
Here’s how pollers responded to what embarrassed them the most out of these six options:
1. Credit card debt – 37%
2. Credit score – 30%
3. Bank balance – 10%
4. None of the above – 9%
5. Weight – 2%
6. Age – 1%
Maybe you’re feeling the same way, or worse: maybe you’re looking at your credit card debt and realizing you’ll never get out of it on your own.
If so, you may want to consider bankruptcy. For people with massive credit card debt, bankruptcy can be a lifesaver. And with the right attitude and spending habit changes, you can come out of the process better than you went in.
If you have any questions or if you’re considering filing for bankruptcy, you can speak to us, free of charge, by filling out the “Get in Touch” form below or by calling us at (901) 327-2100.