Quickest Ways to Pay off Credit Card Debt
Credit card debt is no joke, as it can impact future loans for large purchases, such as a car and a house. If you find yourself receiving multiple letters and calls from the credit card companies or even collectors because you owe money that you borrowed, it’s time to figure out the quickest way to pay off your credit card debt. Take control of your finances and start putting the pieces of your financial future back together.
What Is a Credit Score?
A credit score is primarily based on a credit report which is information typically sourced from credit bureaus. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. In other words, if you are known to make late credit card payments or not at all, no one is going to trust that you will pay for future cards or loans.
Based on the FICO ® Score range of 300 to 850, a credit score below 669 is considered to be either fair or bad. If you’re tired of getting denied, tired of collection agencies calling you, it’s time to raise your credit score. Paying off your credit card debt will get you on the path for financial success.
Know What You Owe
The first step to digging yourself out of debts you owe is to gain a comprehensive understanding of what you actually owe. This may take some investigating, calls to the credit card companies, a look at your credit report and more, so patience is a must.
The whole process can be very overwhelming but all your hard work will pay off. When you compile all of your information, it’s important not to panic. While the number may look very high and be quite surprising, there are easy ways to get through the process and professionals that can help guide you.
Ensure Your Credit Report Is Correct
It’s not uncommon for there to be questionable information on your credit report. You may discover someone made a mistake, whether it was the credit card company or the credit bureaus.
It’s imperative to have this wrong information taken off your report. While you can do this on your own, it is recommended to turn to a professional and reputable credit repair company who has the experience, the relationships and the knowledge to get the job done.
Remember This Is Not a Permanent Situation
With assistance from the experts and a commitment to paying off your credit card debt, there will be an end in site. Whether your lack of payments have scarred your credit report or there was an error, doing something about it is the first step in changing your habits.
Take pride in the fact you’re doing the right thing by paying off your credit card debt. As humans, perfection doesn’t exist. We can only learn from our past mistakes to make changes for a better future.
It’s Time To Get Educated
Leaving a balance on your credit cards, which most people think will be beneficial, will actually damage your credit score.
Experian, one of the top three credit reporting agencies tells us that, “You should never carry a balance of more than 30 percent of your credit limit on any one card or in total. The lower your balances, the better it will be for your credit scores.”
If you can’t make the monthly minimum payments, have multiple credit cards that are overdue and seem to be over your head, there are two effective strategies for paying off debt.
Debt Avalanche vs. Debt Snowball:
The debt avalanche method is a repayment plan where you make the minimum payments on all your debt, while the remaining money goes to the debt with the highest interest rate. The idea is to eventually work your way down.
The advantage of the debt avalanche method is that it lowers the amount of interest you pay over time since you are targeting the highest interest paying debt. This also allows you to pay off your debt quicker.
With the debt snowball method, you pay off your bills from smallest to largest, regardless of the interest. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next balance, working your way up.
The advantage of the debt snowball is that it helps build motivation for debt repayment and you can see your progress quickly.
If you stick with a plan that’s right for you, you can pay off debt fast. You’re the only one in charge of your finances so taking control will empower you in all aspects of your life. Now that you have all the pieces to your financial puzzle, you can put them together and get back on track quickly.
