Are you tired of worrying about the money you owe? Here are four steps to becoming debt-free!
Step 1: Stop adding to credit card debt. If you can’t stop using them, cut them up! Or, leave your credit cards at home when you shop; carry only cash. If you place yourself on a weekly allowance, you will become much more aware of the money you do spend.
If you have to use plastic, consider a debit card rather than a credit card. And, use only 2-4 credit cards rather than a wallet-full. Keep only those cards that you’ve had a long time and on which you have a positive credit history (because you’ve paid them on time). A few good accounts can boost your credit score. Too many cards with too much debt will lower your score.
Step 2: Look at those cards. Reduce your interest rate by asking for a better rate. If you can transfer the balance of a card with a higher rate to one with a lower interest rate, do so! Then pay on time. If you receive a card with a low introductory rate, do not accept it unless you can keep that rate for at least one year. Read the fine print: do not activate a card with hidden fees or costs.
Step 3: Reduce those balances. List each card, its existing balance, minimum payment required, and the interest rate. Pay down the card with the highest interest rate FIRST. If you have to pay the minimum on the other cards to pay off the high-rate card, do so. As soon as the highest interest rate card is paid off, use the same amount to pay down the card with the next highest interest rate and so on until you have paid off ALL the cards.
Keep one low-interest card for emergencies and maintain a zero monthly balance on it by paying it in full when the bill arrives.
Step 4: Once you are debt-free, think about investing the money you’ve been using to retire your debt. If you chose to live on less while getting rid of debt, you can continue to do so while building an investment account.
If you think this can’t be done, think again! Visualize how you will feel being debt-free, paying cash for every purchase, and looking forward to a retirement without worrying about creditors.
One last suggestion: to stop the flood of credit card offers that hit your mailbox, call 1-888-5-OPTOUT (or 1-888-567-8688).
Friday, May 25, 2007
Tuesday, May 15, 2007
Check Your Credit Score - for Free!
As of 2005, consumers may obtain a free report from each of the three credit bureaus every 12 months. To monitor your score, select one of the following bureaus—Equifax, Experian, and TransUnion—and every four months, as one of them for your free credit score. In the second four months, ask a different bureau for your free credit score, and four months later, do the same with the third bureau. As long as you request the credit score from each bureau only once every 12 months, you can receive their report free!
Why is this important? The US Public Interest Research Group found in one study that up to 79% of credit reports contain errors, including duplications and other problems. Some are serious enough to negatively affect a consumer’s opportunity to obtain credit. By monitoring your report, you can check to see that errors have been corrected that you have discovered! When a bureau is told of an error on their report, they have 45 days to correct the problem; most do so within 15 days. However, the same error can appear in different reports; thus, monitoring one’s credit report throughout the year by checking each of the bureaus’ reports can reduce the likelihood that a discrepancy will continue to appear.
To report a problem with your credit report, call toll-free: 877-322-8228 or write a letter to the Annual Credit Report Request Service, PO Box 105281, Atlanta GA 30348-5281. Even faster is to report and dispute an inaccuracy via the following website: www.annualcreditreport.com. This site is secure and thus safe to provide personal information on the authentication form sent to you to report recent transactions, the size of outstanding loans, and the like. Once authenticated, your credit report will appear onscreen. Do not close the window without first printing off the report. When you close the window, the report is gone and along with it, the opportunity for your free report!
One other thing: husbands and wives are viewed as individuals; thus, each spouse may obtain a free report from each of the credit bureaus in a given 12-month period. Finally, a personal query is considered a “soft” pull, and thus does not reduce one’s credit score.
Why is this important? The US Public Interest Research Group found in one study that up to 79% of credit reports contain errors, including duplications and other problems. Some are serious enough to negatively affect a consumer’s opportunity to obtain credit. By monitoring your report, you can check to see that errors have been corrected that you have discovered! When a bureau is told of an error on their report, they have 45 days to correct the problem; most do so within 15 days. However, the same error can appear in different reports; thus, monitoring one’s credit report throughout the year by checking each of the bureaus’ reports can reduce the likelihood that a discrepancy will continue to appear.
To report a problem with your credit report, call toll-free: 877-322-8228 or write a letter to the Annual Credit Report Request Service, PO Box 105281, Atlanta GA 30348-5281. Even faster is to report and dispute an inaccuracy via the following website: www.annualcreditreport.com. This site is secure and thus safe to provide personal information on the authentication form sent to you to report recent transactions, the size of outstanding loans, and the like. Once authenticated, your credit report will appear onscreen. Do not close the window without first printing off the report. When you close the window, the report is gone and along with it, the opportunity for your free report!
One other thing: husbands and wives are viewed as individuals; thus, each spouse may obtain a free report from each of the credit bureaus in a given 12-month period. Finally, a personal query is considered a “soft” pull, and thus does not reduce one’s credit score.
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