Cutting Back to Save My Credit
Many Americans find out the hard way that they need to cut back to help their credit score. If you find yourself in that position don’t be afraid. It is simple management and control over your spending that will help you get back in control.
Start will building a budget that helps you reduce your debt. Even if you are adding an additional $10 a month to reducing your debt, it will help. Once you see that you are not missing that $10 you can increase it little by little until you are making double payments to your credit cards. This will help you reduce your debt quickly.
Pay attention to your credit cards and their interest rates. It is best to pay down your cards with the highest interest rates first. By getting them paid down and possibly paid off you will save money on the interest you were paying. Don’t close out those accounts though because you may want to keep them for your credit score. If they are your oldest accounts, you will find that they help your credit score but you do have to use them. Generally you should charge something on the card and pay it off completely at the end of statement period. This keeps the card showing some activity and you are not getting slammed with a lot of interest. By paying off your credit cards in order from the highest interest rate to the lowest interest rate, you will find that your credit score is going up simply by reducing your debt.
After you have setup a budget and started reducing your debt, you can start planning to save some money to help you build that financial nest egg. Once you have reduced your debt take that extra money you were using to pay down your debt and transfer that directly into a savings account. Building an emergency fund for life’s unexpected things will help you protect yourself from falling into financial ruin. Medical emergencies, unemployment or simple accidents can cause a lot of problems if you don’t have any protection. A good nest-egg is basically 6 months worth of living expenses. What you spend each month for home, food, utilities is what you should consider living expenses. This gives you some time to recover if you become ill or lose your job.
Setting a budget, reducing your debt, building an emergency fund are all the steps you will need to take to improve your credit. Sometimes it will feel that you are attempting the impossible but if start small and try to improve each month it will become easier as you go along. Getting your debt under control is the most important thing because it will help you with your credit score. Then you might be able to refinance things to save you some money.
Start will building a budget that helps you reduce your debt. Even if you are adding an additional $10 a month to reducing your debt, it will help. Once you see that you are not missing that $10 you can increase it little by little until you are making double payments to your credit cards. This will help you reduce your debt quickly.
Pay attention to your credit cards and their interest rates. It is best to pay down your cards with the highest interest rates first. By getting them paid down and possibly paid off you will save money on the interest you were paying. Don’t close out those accounts though because you may want to keep them for your credit score. If they are your oldest accounts, you will find that they help your credit score but you do have to use them. Generally you should charge something on the card and pay it off completely at the end of statement period. This keeps the card showing some activity and you are not getting slammed with a lot of interest. By paying off your credit cards in order from the highest interest rate to the lowest interest rate, you will find that your credit score is going up simply by reducing your debt.
After you have setup a budget and started reducing your debt, you can start planning to save some money to help you build that financial nest egg. Once you have reduced your debt take that extra money you were using to pay down your debt and transfer that directly into a savings account. Building an emergency fund for life’s unexpected things will help you protect yourself from falling into financial ruin. Medical emergencies, unemployment or simple accidents can cause a lot of problems if you don’t have any protection. A good nest-egg is basically 6 months worth of living expenses. What you spend each month for home, food, utilities is what you should consider living expenses. This gives you some time to recover if you become ill or lose your job.
Setting a budget, reducing your debt, building an emergency fund are all the steps you will need to take to improve your credit. Sometimes it will feel that you are attempting the impossible but if start small and try to improve each month it will become easier as you go along. Getting your debt under control is the most important thing because it will help you with your credit score. Then you might be able to refinance things to save you some money.
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