How To Reduce Credit Card Debt and Increase Your Credit Score
As a Real Estate Investor, especially a new one, you should always take care of your credit.
First of all, what is credit?
Credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date.
Your credit power as an investor is heavily affected by your credit score.
So, how can you increase your credit score?
You can begin with a basic technique such as budget planning, but the truth is it is more difficult than it seems. This is even more true with making financial transactions using your credit card since it basically offers you lots of convenience to purchase items you normally would be unable to afford if you had to rely on actual cash to make the purchase.
Below are suggested steps in which you can help achieve a more stable personal finance system and eventually become debt free.
Stop Spending!
It seems like the most obvious thing to do, right? And at the same time is the most difficult one!
With access to credit card, it is relatively convenient for an individual to splurge today without realizing the financial burdens that he or she will have to face in the coming days.
When you already have thousands in debt, stop adding up to your existing debt. Especially major purchases that you will never get any return on your money (e.g. a big plasma TV). Check out this funny video about credit card debt:
Create a Budget Plan
This applies for anyone who wants to establish a healthy financial flow. However, budgeting seems to have been neglected by most families and as a result we spend more than we actually make. But it is not too late to get started on a budget plan yet. Doing so will help you identify areas of your spending habits that lead to wasteful spending and can be eliminated from your budget plan. Start tracking ALL everyday expenses for 30 days. You will be shocked when you realize how much money you spend on things that you thought they are not important.
Creating a budget plan will also enable you to appropriate the more important expenses and make them a priority in your list. This is an important method in financial planning that people often fail to undertake with using credit card.
Reduce your Credit Card Interest Rate and Increase your Credit Card limit
Another way that you can help eliminate your credit card debt is by decreasing your credit card rate. This can impact your monthly cash flow if you have a large personal debt by reducing the interest rate.
Call the customer service of your credit card (you can find the phone number on the back of your card) and tell them that you are customer for X years and you want to make a purchase with this credit card. Then, ask “how much can you increase my credit limit?” After they tell you, ask “since we are at it, what’s the best interest rate you can give me?” You will be amazed what you can get just by asking.
Now, not all credit cards will increase your credit limit and/or reduce your credit card interest rate. If that’s the case ask to talk to their supervisor! Emphasize that you are a customer for X years. Many times you’ll get what you want.
Do that for ALL your credit cards.
This will increase your credit score significantly.
It’s worth the time and effort especially in this economy.
Some of the benefits of increasing your credit score are:
- Stronger purchasing power
- Qualify for home loans
- Qualify for car loans
- Better interest rates on home, cars and credit cards
- Peace of mind!
Until next time,
Keep Raising Your Real Estate IQ!
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Comments
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Thanks for sharing such great post, according to me elimination of credit card debt isn’t an easy thing to do, especially in today’s life when money is tight for everyone. So according to me using of cash than credit card is better option.
This really help to smash your way out of debt. Great post!
Avoiding The Credit Crunch!
Samantha
http://bit.ly/2Wb765
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