How To Get Off Credit

Introduction

High or bad credit is a situation we get ourselves into but that we can also get ourselves out of. It takes discipline and a little bit of discomfort, but the idea of financial breathing space and regaining financial freedom should be reason enough to motivate you to get off credit.

Here are some ways that you can use to get off credit.

Step 1

Tip 1: Emergency fund

You need to do this early enough. This fund can be used to pay off the amount with the highest rate of interest.

Step 2

Tip 2: Always topple the minimum

One way of getting off credit sooner is to pay more than the minimum payment for each month. The minimum payment is often inclusive of the interest on your account. Therefore, when you pay only the minimum amount, the credit company will make more interest as you lose more cash. This, plus the fact that paying the minimum will take you more time to get off credit is reason enough to always try and go over the minimum in paying back.

Step 3

Tip 3: It is not set in stone

Always try and negotiate for a lower interest rate if your financial problems are getting out of hand. You can walk into the credit company and explain your situation. This is better than getting yourself a bad credit record. If required, negotiate for a low interest rate at which you will find it easier to make your credit card payments on your way to getting off credit. You can also negotiate or rather request for a different payment plan that is more affordable for you. When the situation gets better, you can ask for the amount of repayment to be raised in order to finish off and get off credit.

Step 4

Tip 4: The highest goes first

If you have multiple debts, it is always prudent to decide on which debt to pay down and in what order. Make a list of all your loans and lines of credit and credit card and their interest rates as well. Therefore, start with paying off the debts that have the highest interest rates first such as the payday loans and credit cards as well as retail charge amounts. The higher a debt’s interest rate, the more it costs you in interest per dollar of debt. It is not necessarily true that the credit card is the most expensive debt.

Step 5

Tip 5: Change how you live

When you really want to get off credit one of the things that you definitely need to do is to change your lifestyle. You will need to cut down on some things, sell others and sometimes actually move house. You can also try a part time job to earn more money to pay back faster, commute via public transport as you save on fuel and so on.

Tips

Make sure that you do not use your credit card on daily expenses because then you will be taking one step forward and two steps back.

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