The following is a guest post on a timely personal finance topic from Alicia, a tech writer from the UK with a fondness for finance. We encourage you to follow her on Twitter at @financeport for more debt reduction and personal finance tips and information. Without further adieu:
Get Out of Debt by Enhancing Your Credit Score
In the present competitive world many people are prone to being burdened with debts which come about for one reason or another. Irrespective of the reasons, these debts can cause real trouble by bringing down people’s credit score; this needs to be resolved immediately. The best way to improve your credit rating is by paying back all of your debts. Here are some helpful tips that can be followed to get out of debt and improve your credit score:
- Stick to your budget plan: It is vital to design a budget plan that will suit your standard of living. It should include all the income and expense details which can be modified accordingly. Once the plan is prepared, stick to it with complete determination and dedication.
- Keep reminders of overdue dates: Most debts that you owe should be repaid in monthly payments, which are a sum of interest charges and a portion of the principle amount. Dates are specified for these payments to be made. Be sure to keep track of them. Assuring that all bills are paid on time that will not only avoid penalties but will also have a positive impact on your credit rating.
- Overpayments: People tend to pay the exact repayment amount, but it is advised to avoid this strategy and try to pay more than required as that will cut down principle amount borrowed, which will in turn improve your credit score. This can be done with the assistance of payday loans or by directly transfering money from your savings account to repay your debts.
- Check credit history periodically: Your credit history should be checked periodically in order to avoid surprises and unforeseen consequences. Reviewing your credit report allows you to know the exact details of all the debts owed, and if there are any errors on the report they can be addressed before they become a problem. It is even possible to know if there is any crossing of credit limit, if so then it can be prevented
- Opt for a debt consolidation loan: One of the best options many borrowers is to repay all existing debts through a debt consolidation loan instead of declaring bankruptcy. This type of loan provides a certain amount as a loan with relatively lower interest rates. The consolidator is capable of collecting monthly payments and distributing it among all the creditors for fast repayment and subsequent improvement of your credit rating.
- Avoid credit card use: The latest survey conducted has proved that one of the main reasons for accruing debts is due to the use of credit cards, where card holders are prone to exceeding their credit limit. The ultimate result can be overwhelming debts. It is manageable to use credit cards wisely to some extent, however avoiding them would be the better choice.
- Utilise liquid assets: You can find many liquid assets that are just lying around your home that have cash value; these assets can be sold to get money that can be utilised in repaying debts.
My name is Alicia. I am a tech writer from UK. I am into Finance. Catch me @financeport