A good credit score is made up of many components, but the most important is limited debt or getting out of delinquent accounts. Sounds impossible, right? Getting out of debt isn’t as hard as you may think. In fact, many people have successfully reduced their debt without the help of credit negotiations or bankruptcy. There are a few tricks of the trade to help you get out of debt and improve your credit score.
Some people avoid automatic payments because they feel like they can’t monitor the accounts and something may go wrong. What really happens is those who tend to pay their debts manually have a higher likelihood of missing a payment or being late with a payment. When you set up your debt payments to be automatically paid out of your bank account, you do not have to worry about missing or being late with a payment. Further, the payment will be made before you can second guess whether you would rather spend the money elsewhere. All in all, automatically paying your debt payments can make you a more responsible and consistent payer, which can directly influence the quality of your credit score.
Paying More Than The Minimum
Although creditors enjoy you paying the minimum amount so they can collect far more than the principal amount owed through years of interest payments, it is not a good credit strategy. Paying the minimum on accounts is only acceptable as part of a debt elimination plan, whereby you are paying minimums on a few accounts and paying all the extra towards one account until it is paid off. Keep in mind that anytime you can afford to pay more than the minimum, do so. It helps reduce the debt balance faster, which is the trademark of a good credit holder.