Credit Card Debt Management
Credit card debt management can be tough if there are many credit cards to manage, or a lot of debt to consider and pay down. Additionally worries about identify theft and credit scores can make the process seem overwhelming, but credit card debt management is vital to any long term debt repayment plan and should be carefully considered along with wise budgeting and stewardship.
The following steps should be taken to successfully achieve credit card debt management:
Know the Debt
First, those in credit card debt must know how much they owe. There must be an honest and accurate accounting of the debt. It is easy when in debt to try and forget about it. The bill comes, it gets paid (and likely a minimum payment at that) and life goes on. There is not much attention paid to the balance if in fact, a quick look at the balance might be depressing and so it is avoided altogether.
Knowing the how much debt exists is critically important to a plan for credit card debt management. It is important so there will be success in the end and that the debt can be paid off. Setting goals for the paydown of the credit cards is important and this can't be done until the oustanding balance has been appropriately analyzed.
Anyone in debt should always have an accounting of what the debt is. There should be a list of all credit cards and balances, along with interest rates, minimum payments and credit limit. Knowing these few facts, and updating when necessary, goes a long way toward being educated about the debt and truly cognizant of what it will take to pay the debt off.
Know the Score
Everyone should know their credit rating, regardless of how much credit card debt they have, whether a little or a lot. Getting a credit report on a regular basis ensures that the credit has never been compromised and ensures that any paid off debt is correctly accounted for on the credit record.
All Americans can get one free credit report a year. There is a minimal cost for getting the actual credit score, and it varies by credit reporting agency, but getting that score once a year is essential. Visit www.annualcreditreport.com to find your credit report free of charge.
When getting really serious about credit card debt management, it might be necessary to get a credit score more than once a year. The score can change from month to month, so those who are really serious about personal credit records should retrieve a credit score more often.
The FICO score, or credit score, takes into account a variety of factors, from payment history, to debt to income ratio. It considers bankruptcies, credit history and available credit. Having a good credit or FICO score can mean the difference between a desirable low interest rate and a less desirable higher interest rate when purchasing a car or house.
Depending on the purchase and amount, the difference in monthly payments can be hundreds of dollars. Keeping a good credit score and improving upon it whenever possible is essential to successful credit card debt management.
Manage the Debt
This means the debtor must own the debt. Owning the debt means paying on time, not giving up when it seems difficult and staying responsible for the outstanding balance until it is paid off.
Credit experts say that the biggest detriments to credit scores are paying late, having too much debt and maxing out the credit cards. If you have already accrued too much debt, and maxed out most credit cards, make sure you always make your payments timely in order to avoid further penalty to your credit score.
Once the debt is accrued, there is not much to do but work towards paying it off. Once the cards are maxed, there is nothing left to do but stop using the cards. Paying the cards on time, even if it is just a minimum payment at the start, is critical.
Really owning the debt means not looking for the easy way out, or the quick fix. It means not turning to bankruptcy or charge-offs to fix a serious problem. Although it is harder to actually work on the debt when credit cards are maxed, minimum payments are high and money is tight, it is the right way to handle the debt. It might have been easy to get into debt, but it is a hard road out. Own the debt and make the repayment a matter of constant prayer and faith as God opens doors to bless your future financial decisions.