It is almost time for spring cleaning, and this includes cleaning up your finances. There is never a bad time for getting control of your finances and putting your money to work for you. If you haven’t already taken a look at your finances this year, make a commitment to get on track and bring that credit score up.
Mopping Up A Mess
If you are like most Americans you probably carry three or more credit cards and hold an average of $6,000 or more in debt. While having some debt is good for your credit standing, having too much or being delinquent on accounts can really do damage.
The best place to start cleaning is your credit report. Anyone can get a free copy of their credit report online or through accredited bureaus. Take a look at your credit report and make sure all of the information is correct.
Next, examine your debt accounts to determine the debt-to-limit ratio. This is the total debt balance divided by the maximum credit limit on the account. Ideally, this number should be around 30 percent. Anything over 30 percent should be flagged for reduction with the exception of secured assets like a mortgage or car loan, which can carry higher debt-to-limit ratios without damaging your credit. All unsecured debts like credit cards and loans should be put into a debt management plan.
Work on lowering your overall total debt liability by reducing your ratios to below 30 percent on most accounts. It is also important to remove any negative account standings such as past due or delinquent accounts. These accounts should take priority for payment until the negative account history is removed. As you closely monitor your budget and debt accounts, you will begin to see an improvement in your credit in no time.