If you’ve been burdened with credit card debt thanks to a bad credit record, then it’s important to know that you’re not on your own – more consumers around the world are feeling the harsh pinch of the recession on their finances.
Between unemployment, salary cuts and the rising prices of necessities like groceries and gas, it’s safe to say that your money is going towards other expenses before you can even think about your credit card debt! However, while feeling as though your budget is on its last leg is no fun, during these uncertain times it’s ideal to get your finances straightened out as soon as possible.
But how can you tackle credit card debt, especially when there’s no room in your budget for the challenge? It’s easy: follow these steps down to the letter, and watch as your debt – and your credit score – starts to look up!
Take Advantage Of Automatic Debit. If you haven’t taken advantage of this great program (now offered by most banks), then you’re cheating yourself out of a top-notch way of paying all of your bills on time. Automatic debit takes money for your credit card payments out of your bank account, so you’ll always pay your bills on time with little effort on your part. Since your rating is mainly made up of your payment history (35%, to be exact), it’s a great way to get one of the major fundamentals to a good credit score down pat.
Don’t Avoid Plastic. Can’t seem to get a handle on your spending thanks to credit cards? Your first impulse might be to shun all plastic, but don’t make this costly mistake. Keep at least one card with an open credit line around, as a huge part of your credit score is made up of your debt to credit line ratio (30%). If your cards are maxed out, get a personal finance expert to rework your monthly household budget to find extra money to apply to those outstanding balances. You’ll be surprised at how much extra cash you can throw at these balances, which will help you defeat that toxic debt once and for all.
Get A Prepaid Credit Card. Can’t get a handle on your spending? It’s important to have a credit card to boost your score; however, this will do nothing for you if you can’t get a handle on your finances in the first place! Savvy consumers know that when it comes to credit cards, they need a prepaid card that works wonders towards improving credit scores. Prepaid credit cards are viewed as ordinary cards by the credit bureau, so they’ll work hard towards improving your credit score; additionally, you’ll never be at risk of overextending your prepaid card, since you can only spend the balance that’s on there. Expect to put up a deposit to get a prepaid card, as this money will be used in case you max out your limit. It’s a great way to improve your credit score while learning about financial responsibility!