To put myself through college I had to pay my own bills and pay for school. Unfortunately, this left me with some credit card debt. My credit is okay – as I’ve never been late on payments or anything – but I was wondering if anyone knows a safe way to consolidate or minimize my monthly payments without damaging my credit???
January 22nd, 2010 at 4:34 pm
First, good for you for paying your own bills and paying for school! You’ve learned many important lessons in self-sufficiency that will last a lifetime.
The trade off you’re up against is this: you can obtain a lower interest rate at the cost of some points on your FICO credit score. But if you open no new lines of credit, you keep your credit score along with high interest rates.
Example: a 0% interest balance transfer, where the 0% expires in 3 to 12 months, depending on your credit score. You can apply for it, but that will cost you about 5 points for the hard inquiry of your credit history. The new company gives you a credit limit, and you must make a transfer that’s no more than 30% of that credit limit, else you lose "credit utilization" points (30% of your FICO score) for having a balance that’s too close to maxing out the credit limit.
Also, if the transfer is an even higher percentage of the limit, above 50%, you risk tripping the dreaded Universal Default clause of ANY creditor that has such a clause and looks at your credit report. You’ll send the interest rate soaring. Read your Terms and Conditions (i.e., the fine print) of every revolving credit account to search for a Universal Default clause.
I don’t recommend a debt management program.
Best advice: Given that you already pay at least the minimum on time, you’ll improve your score the most by dropping the balances that are closest percentage-wise to the credit limit. If 2 or more accounts have the same percentage of utilization of the credit limit, pay off the one with the higher interest rate. As your score goes up, you’ll have more options at lower interest rates. If you pay a balance down to 0, do NOT close the account. That open 0 balance can affect (to your benefit) up to 45% of your credit score.
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January 22nd, 2010 at 4:34 pm
I found this information at http://creditapply.org/blog/ under the posting "How can I lower my credit card debt.
The main and most important point I found is to attack the balance with the highest APR.
"People are tempted to pay off low-balance bills first and eliminating a bill or two. Instead you should start by paying the minimum payments on the cards with the lowest interest rates. On highest interest rate card, pay all the rest of your allotted money. Keep doing that until you have paid off the card with the highest interest rate, Then, move the next highest interest rate card into that position and keep paying down the highest rate cards first."
Also take a hard look at your finances and determine how much you can realistically afford to pay each month. When people track their spending every day for a month they get a firm handle on where their money is actually going. This will usually bring a 20 percent saving because people will start to cut back.
In the blog there is some more advice but the main points are
* Gain control of the urge to splurge
* Leave your credit card at home.
* Start making a financial plan today.
* Define the amount to allocate to credit card payments.
* If you have a saving account use the money to pay off debt.
* Consider a debt consolidation loan.
* Call Consumer Credit Counseling Services
* As the very last resort, use a debt workout/debt reduction firm
January 22nd, 2010 at 4:34 pm
Get a Credit Card Debt Consolidation Loan
When using the credit card, people ignore the consequences of using the card too often. Frequent use of credit card causes bills to be accumulated and worsens your credit score. Besides lowering your credit score, you also face financial burden since the interest charged is very high.
http://debt-refinance-loan.com/category/Credit-Card-Debt-Consolidation-Loan.html
January 22nd, 2010 at 4:34 pm
live as cheap as you can and put the extra money on the bills. Do a written budget. Nobody wants to do one but, they do help you find the money to put on the bills. there is not easy way to do this. check out daveramsey.com and listen to his radio show in the archives of his website.
January 22nd, 2010 at 4:34 pm
I would suggest you to join a debt settlement company. Check this company
http://www.debtfreeafterall.com
They will negotiate with your creditors on your behalf and bring down your principal debt amount by around 30% to 70% depending on your credit companies and they can knock off the debt with LOW monthly payments within 36 months.
They have helped me out with the same unsecured debt situation.
Good Luck
January 22nd, 2010 at 4:34 pm
You can do it yourself with the Credit Repair Manual
http://www.thecreditrepairmanual.com
January 22nd, 2010 at 4:34 pm
you can make your minimum payments every month.
January 22nd, 2010 at 4:34 pm
Studies have shown that all consolidation really does is make your payments more simple. Most people end up paying just as much if not more in interest over the years when consolidate.
Remember that many people with very high credit scores live their entire lives carrying some debt. The key is always to make sure you can make your minimum payments every month. If you keep doing that your credit score is going to increase over time. And as your income improves you will be able to chip away at it.
One good thing to look for is credit card offers that give you 0% interst on balance transfers. That way you can move your debt from high interst cards and lower that annoying interest payment every month.
January 22nd, 2010 at 4:34 pm
1. Talk to a loan officer and see about getting a loan to pay off your credit card debt. I did this recently with a few high interest things I had. As long as it’s a loan through a bank, it should not hurt your credit (I asked before I did it).
DO NOT go through a debt consolidation company. Most of these will hurt your credit and most will result in your accounts being closed.
2. I always recommend creating a budget and following it. If you don’t want to get the loan, I would recommend, paying your minimum balance on all your cards, but your lowest one and concentrate on it. Once that’s paid off, take that money and add it to the second lowest and so forth.
January 23rd, 2010 at 7:39 pm
gr8 Work bro?