How To Tackle Debt And Improve Your Credit At The Same Time

It's no secret that television and radio stations love to talk about the global credit crunch - but you don't have to tune in to your favorite news show in order to feel the squeeze on your own budget. If you're like the millions of pinched consumers out there, you're probably struggling to pay for your necessities and tackle your credit card debt, without any relief in the near future. Even if you've got your bills under control, it's always important to use the recession as an opportunity to make sure that your financial education is on the right track. If you're ready to tackle your debt and improve your credit at the same time, then pay attention - these are the expert debt-busting tips that you need to follow in order to protect yourself from bad credit - and a mountain of debt - for life!

Pay All Bills On Time. It may seem simple, but for many individuals, paying bills on time is a lot harder to put into action. However, this is the ultimate rule towards tackling debt and improving your credit score during these uncertain economic times, since a large percentage of your credit score is determined through your payment history (35%, to be exact). If you have a tendency to forget the due dates of your bills - and let's face it, who hasn't done this every once in awhile? - try enrolling in automatic bill pay, where the money is directly taken from your bank account on your credit card's due date. It's really that simple to get a handle on all of those due dates!

Don't Get Rid Of Old Accounts. Not only should you have an open line of credit on hand in case of emergencies, but having this available credit will actually improve your credit score as well, as a large portion of your credit rating is composed of your debt to available credit ratio (30%). Keeping a credit card with an open line makes any debt that you have look smaller, which will help to boost your score and reduce interest payments on that remaining debt.

Work Out A Budget. If you feel as though you have no clue where your money goes at the end of the month, then you need to sit down and work out a household budget. If you aren't sure how to do this, check out some of our earlier articles on making a budget, or hire a personal finance professional who can show you what to do. Remember, the goal of the budget is to cut down on luxuries and free up extra money to throw at your credit card debt, so be sure not to gloss over your expensive latte habit. You'll be on track towards a debt-free lifestyle ' and a drastically improved credit score - in no time at all!


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