It is hard to believe, but the summer of 2024 is almost here. It is likely that millions of Americans have made a resolution to lower their credit card debt this year. If you are one of them, we put together this guide to help you keep that resolution.
Step 1: Know Your Credit Report
Check your credit. Request your free annual credit report and make sure you understand everything listed. You will want to look for inaccurate information, fraud and any signs of identity theft. After you have reviewed your report, you will have a better understanding of where you are in terms of your credit history and score, which is invaluable to starting the new year on the right financial foot.
Step 2: Improve Your Chances for Success
If you have a high interest rate on your current debt, you may want to apply for a balance transfer credit card. Generally, these cards offer an introductory APR of 0% for 12 to 18 months, which can save you hundreds, perhaps even thousands, of dollars in interest penalties. A balance transfer card may help you become debt-free in 2024, as it will help you pay off your principal balances faster.
Step 3: Create a Good Credit Profile
If you noticed problems on your credit report, now is a good time to make changes. Start with small, achievable goals such as setting a reminder on your calendar or setting up auto-pay so that you always make payments on-time. Also, make sure you do not charge more than 30% of your available credit so your debt-to-available credit ratio is not too high. You will also want to avoid credit inquiries. Finally, consider consolidating your debt to lower interest payments. Being debt free starts with spending less, properly managing debt and lowering interest payments.
Step 4: Know Why You’re Denied for Credit
If you are denied for a loan or given unfavorable credit card terms, creditors must tell you what credit score they used when making their lending decision. If you were recently turned down for financing, you should receive a letter within 30 days that reveals your credit score and states what negative elements influenced the company’s decision. This will help you figure out what is holding you back, and how you can increase your credit score.
Step 5: Get Help
If you cannot make a payment, reach out to your creditor and explain your situation. Credit card companies are not making money when you are not paying, so they may help you by pushing back a due date or lowering your interest rate, making payments more affordable. If you are in a tight spot, reach out to your creditor for help. It does not hurt to ask.