Managing Over $10000 In Debt
Filed under Credit
Debt management is something that everyone must practice, yet many overlook. This is especially important when your unsecured debts have exceeded the $10,000.00 mark. Many statistics have shown that this key level of debt can signal financial success or failure. Managing your debt is crucial to financial independence and can be accomplished quite simply.
Debt Management
First Steps To Debt Management
As everyone is well aware, credit scores play a very significant role in debt and debt management. Borrowing money, either secured or unsecured, becomes more expensive when scores are low. Managing your credit score so that it remains high is your first step to money management.
Credit scores are affected by high balances on credit card debt, late bill payments, and charged off debt. All credit card balances should never exceed the range between 50 and 60% of the available credit. Credit card utilization should ideally be much lower in the 0 to 20% range.
Bill payments should be placed on auto-pay for monthly payments, and scheduled two days prior to the due date. Never schedule a payment for the due date, processing errors can cause the payment to be late. Applications for new credit should be limited to no more than two applications in any 30 day period.
Next Step For Debt Management
If you have high interest credit cards with large balances, you need to pay these cards down or off first. Utilize low interest balance transfers to other credit cards, home equity lines of credit or personal loans to take care of these debts. When you are making minimum payments on high interest credit cards you are, in a way, paying for nothing. These cards are designed to take as long as a mortgage to pay off, something many consumers do not realize.
Final Step For Debt Management
Once you have began paying down your debt you must commit to keep your spending under control. Many people will follow through with the first two steps of debt management only to charge-up the high interest credit cards again.
Debt management is a three step process. You must keep a good credit score to reduce borrowing costs, you must reduce high interest debt and you must control spending. If you are able to do this, your debt, regardless of size, will be manageable.
Tags: Credit Debt Management
Secured Credit Cards To Rebuild Credit
Filed under Credit
If you have a negative credit score and are looking to improve it fast, there are a number of steps you can follow to bring your scores up. One of the best ways is to apply for a secured credit card. Slowly but steadily, a $200 secured credit card can help you up your credit scores and eventually qualify for a mortgage within a few years. Here is how it works:
Applying for a Secured Credit Card
The first step is to apply for a secured credit card. The application process is easy and can be done on the Internet. Nearly all applications are approved. To get the right secured credit card provider online, compare the rates of different lenders and check their terms and conditions. Also, go for a lender offering affordable rates.
How a Secured Credit Card Works
You can use a secured credit card for normal expenses like purchasing groceries, paying restaurant bills, or buying online. The difference between the card and an unsecured one is that it has a spending limit. You set the limit yourself by depositing money to your bank account, which is a form of security to the lender. When you have exhausted the amount deposited, you cannot use the card again until you deposit more money. In case you fail to pay the money, the lender will deduct the amount from the security deposit in your account.
There are a number of fees you will have to pay for the secured credit cards. These include signup, maintenance and annual fees.
Pay On Time To Improve Your Credit Score
If you are looking to improve your credit score, make your payment on time. When you do this consistently, your credit score will start to improve. Also, make small purchases at a time. This will show the lender that you are learning how to handle money carefully and will help to boost your credit scores.
Secured credit card bureaus usually share their borrowers’ spending information with major credit bureaus. When the bureaus see your spending habits are improving and you are making your payments on time, they can consider you for a loan should you decide to borrow from them. No credit history means they have nothing to compare and judge your ability to repay bigger loans.