Taking steps to eliminate credit card debt can have dramatically improve your credit rating. You may have several options to get your credit back on track. One option you should avoid is a credit repair company. These companies promise a fast and easy way to erase bad credit for a substantial fee. The truth is they cannot do anything more than you can do yourself.
The first step is to bring all accounts to a current status. About 35% of your credit score depends upon your actual payment history. It is true that late payments will still reduce your score, but their effect will be lessened as more time passes. Bringing the accounts to a current status will have an immediate positive impact on your score.
Next begin to pay down the balances. The way to eliminate credit card debt is to pay off all of the principal. Interest payments will delay this by consuming most of your minimum payments. Asking creditors to reduce interest rates will help you steer more of your payments toward the principal balances. Getting your balances below 30% of your credit limits will boost your credit score even more.
Keep all accounts in good standing. Your open accounts are what your credit score will be built upon. Only charge what you can pay off each month. You will be able to pay it off in full every month and your credit will improve.
Do not close accounts once you have paid them off. The length of time you have kept an account will help improve your credit score. Also, if you still have balances on other accounts, then closing accounts will increase your debt-to-credit limit ratio and reduce your score.
One item that may be outside of your control is inaccurate information. Dispute all inaccuracies that you find on your credit report. Get your free credit report to see what information has been reported. You can dispute wrong information online.
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