The Fastest Way To Fix Your Credit Score

February 28th, 2017 → 8:51 pm @ // Comments Off on The Fastest Way To Fix Your Credit Score

Raise Credit ScoreThe Fastest Way To Fix Your Credit Score

If you have one or more maxed out cards or you run a high balance on your credit cards, then these simple elements can increase your credit score immediately.

The issue with having high balance is something called the “debt ratio” or the “utilization ratio.”

This debt ratio accounts for 30% of your overall credit score. It is the second most important factor in your credit behind making your payments on time. The good news is, this is very simple to fix. This is actually the fastest “credit destroyer” you can fix that will have the most influence on your score.

So what exactly is that the debt ratio? The debt ratio is determined by your accessible credit limit and how much of that you use.

Let’s say you have a credit card limit of $1,000, if you use $500 of that limit you have a 50% utilization ratio.

Now, that’s not terrible, but it’s not grand either. Ideally you want your utilization rate to be below 22%. Below 10% is even better.

How do you achieve this?

There are a number of ways. First, you can reassign the balance of one of your credit cards to a new or existing credit card.

Please make a note: if you have any debt this can actually help you save on your APR as well. By moving a high balance credit card to a lower balance credit card, you are lowering your use of available credit. Read more here!

Another option is to slowly pay down the balance that you have on your credit card. This can take a while and you won’t see your score increase as quick, however it’s a powerful long-term plan. Taking care of your debt is the highest concern on your credit.

Why?

Because with some aspects of your credit it takes a while to fix. However, with the right ratio you can change it swiftly. This is how you can see your score go up 30 points or more within a month.

By getting a balance transfer or paying down your balance overall you can quickly take care of this dilemma.

Another problem is that a lot of people think that they should reduce their limit so that they can’t spend too much on the card… But this is completely wrong. By reducing your limit you’re actually killing your debt ratio.

Another way you can lower your utilization ratio is to contact your credit card issuer and ask for an increase on your credit card limit. If you make your payments on time they should have no problem with this.

These are the three simplest ways to deal with this problem.

Summary:

1. You can use a balance transfer to lower the amount of credit you’re using on specific card to another card.

2. Slowly pay down your balance until it’s below 22%, preferably under 10%.

3. Contact your credit card issuer and get your limit raised.

You can read other artcles on credit here!

Credit Cards &Debt

Using a Debt Management Plan to Get Out of Debt

January 11th, 2017 → 8:35 pm @ // No Comments

Using a Debt Management Plan to Get Out of Debt

Your debt is piling up every single day. Yet, you realize you are not in the best position to handle all your repayment efficiently? Consider using a Debt Management Plan (DMP)!

debt

DMP is a unique plan specially devised for a debtor to pay back his bills to the creditors in a way that is voluntarily agreed by both parties. It is normally arranged through a third party, a debt management company, which also provide professional financial advices and budgeting services to the debtors. If you are thinking that such services would cost a lot, there are also free or low-fee DMP organisations (e.g. charities, government agencies) around!

So what are the pros and cons of using a DMP to repay your debts?

Pros:

  1. A DMP allows you to pay a single amount each month to your DMP company, which will then distribute the money to your creditors. Your repayment rate will be negotiated with you and your creditors to suit your income level. This provides a better control over your finances and prevents you from borrowing money to settle your debt!
  2. It can give you a peace of mind as your creditors will no longer hunt you down through various means
  3. In some cases, creditors will agree to freeze charges and interests, which keeps your debt stable rather than ever increasing.
  4. If you are committed to your DMP, you will get out of debt slowly but surely!

 

Cons / Limitations:

  1. Creditors are not obliged to follow your DMP and can still choose to contact you for immediate repayment;
  2. You can only enter a DMP if you have leftover money every month after deducting all your essential expenditures
  3. Only unsecured debts (e.g. credit cards, overdrafts) are covered by DMP, whereas secured debts (e.g. mortgages, utilities) are not

 

While choosing your management plan provider, do make sure they have discussed all the possible options available to you and you must be well aware of how much you need to pay for how long. Commit to your plan and that will bring you out of your bills!

Please read the fastest way to fix your debt by clicking here!

Blog &Debt

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