Struggling with credit card debt? We’ve all been there before. You may feel shame, embarrassment, and hopeless. However, it is possible to repair your credit and restore your good name. It takes work to get into debt, and work to get out of debt. however, if you wish to have a better future for yourself and those you love the resulting changes in spending lifestyle will be well worth it. There are literally thousands books on repairing your credit and getting out of debt, however for the purposes of brevity I shall highlight three.
1. Throw away junk credit card offers- I personally dislike when a company tries to tell me what I need and unsolicited credit card offers are about as bothersome as it gets. The credit card companies use predatory marketing techniques to convince you to get credit card you don’t need. The introductory terms and cash back awards can be tempting, but remember that to the credit card companies you are just a number, so use shared financial sense. Ditch the new offers and concentrate on repairing your current credit lines.
2. Don’t always close paid off accounts- When trying to get out of debt many people close a credit card account as soon as it is paid off. Naturally many figure that the best way to continue getting out of debt is to eliminate temptation. This logic unfortunately can harm your credit more than it can help it. The credit bureaus use a credit availability formula as one of the evaluating factors when looking at your credit. Let’s say hypothetically a person has $5,000 in obtainable credit and they just finished paying off a credit card for $1,000. So they would have 4/5 of their credit utilized. If the account is closed the obtainable credit line sinks to $4,000, and the complete line of credit is now utilized damaging your credit score. So it is often best to wait to close an unwanted account until you have all or nearly all of your debt paid off.
3. When closing an account ask for a confirmation letter- Closing a credit card account is an easy phone call away. However, if you are not careful a closed account can damage your credit report due to a clerical error. When a credit card is closed there is a small line by the account on your credit report. It is imperative that you make sure the line states “account in good standing and closed at customer’s request”, otherwise a possible lender may think that the account was closed due to nonpayment or another negative issue. Your credit becomes more basic everyday in our modern world and a little additional effort in a follow up can pay dividends.