How to Get Debt Free

There are many reasons to have at least two credit cards if you are responsible in using them, but some people have a stack of cards from stores, oil companies and banks. Like a lot of people you probably rarely use most of them. One problem with having so many credit cards is most lenders look at the ones with no existing balance or very low balances and conclude that you have the potential to use them and get into debt. Even if you have proven to be a responsible user of credit, these excess cards could come back to hurt you the next time you apply for a mortgage or other loans.

Example: You have several credit cards and the combined outstanding balance on them is $15,000 below your credit limit. You apply for a mortgage and the mortgage lender may question your ability to repay both a mortgage and $15,000 worth of new purchases that you could possibly have on your credit cards if you were to make new purchases. Your overall credit score can suffer, resulting in the lender charging you a higher interest rate or denying the loan altogether.

One solution is to cancel the credit cards you rarely or never use well before you apply for another loan. Start by closing your newer credit card accounts because your credit score can be lowered if your credit history appears shorter than it really is. You can also ask your bank to reduce your credit limit thus lowering the amount of available credit to ensure you don’t get into trouble with debt. Every circumstance is different but having more credit available than what you reasonably need or use can hurt you in the long run.

For more tips and strategies on debt and credit cards visit www.howtogetdebtfree.org

Technorati Tags: Budgeting, Credit Card Debt, Debt Elimination

Credit Cards can provide great consumer benefits, but as with any form of borrowed money, you have got to be careful about how you manage credit card debt along with other kinds of debt that you may have.

Paying your bills on time will allow you to maintain a good credit record and thus qualify you for lower interest rates. Don’t wait until the last minute to pay your bills thus avoiding late payment fees but more importantly this reduces the risk of triggering higher interest cost if the payments arrive late. Your payment history on your debts and bills is one of the biggest factors in determining your credit report and credit score.

A credit report is basically a history of how you pay your credit card bills, loans, rent and other consumer debts. A credit score is a number that is based on your credit report and is a direct reflection on your financial responsibility. Both of these are part of your overall history which can determine your ability to get low cost loans or a lower interest rate on credit cards.

One or two late payments over a long period of time will unlikely damage your credit history but making a habit of missing payments or being late can result in a higher interest rate, higher fees or both when you seek to obtain any type of loan or credit card. Lenders put more emphasis on your recent history but be especially careful with payments in the months before you apply for a loan or credit card.

People that pay their credit card bills late may face a major interest rate hike that can be between 29 and 35 percent. Late payments on that card can also trigger rate hikes on other cards or loans; especially of your credit history shows signs of risk.

The main thing is if you carry a balance on credit cards or have any other types of loans make sure to pay them on time and avoid late payments to be able to maintain a good credit rating.

For more tips and techniques visit www.howtogetdebtfree.org

Technorati Tags: Budgeting, Credit Card Debt, Debt Elimination