If you are trying to figure out to improve your credit score, the best way to do it is to close credit card accounts. Many people more than just Visa, MasterCard and Discover cards, and also have retail and online store cards, gas cards, and cards issued by just about any merchant you can think of. Having too much available credit, and high balances, can damage your credit score.
The first thing you should do is consolidate your credit cards to reduce the number of cards you have available to you. Having fewer cards helps your credit score. Talk with your bank to find out if they will close an account pending payoff of the balance, and then work to pay down the debt.
Next, you’ll want to work on paying down the balances of the cards you have. Credit scores are impacted not just by number of cards, but also how close you are the credit limit on those cards. Even if you pay on time, having maxed-out cards can lower your score. Start paying down those debts by adding a little extra to your monthly payment. You can also learn more by finding a good Consolidate Credit Card Debts Guide to help get your on the right track.
When you pay extra beyond the minimum monthly payment, you are helping to reduce the principle balance on which interest is calculated. So, you lower the total amount you owe interest on, as well as improve your credit score.
What if you don’t have any extra cash? It’s nearly always possible to squeeze a little extra out of your monthly budget. Think about the spending that we do completely unconsciously: getting your hair or nails done, picking up the impulse items when shopping at the supermarket, monthly subscriptions to magazines and newspapers, gourmet coffee spending. This extra $25-50 per month can go toward paying off your credit, and eventually, be added to your wealth building.
If you don’t have any place to cut, or even if you do, you can also find small, part time ways to make money and add that income to the payoff plan. For example, you can find many ways to make money online through eBay, Amazon Marketplace, or other online vendors where you can sell extra things of your own, or sell their products to others for a commission payment. It is possible to bring in $50 a month with very little work and literally no upfront investment. Put all extra income from a business or second job directly toward your debt amount.
By following these steps, and getting rid of your credit card debt, you can start to improve your credit score, but most importantly, you’ll be building a stronger financial future by paying down debt and starting to save more for your future.
