This post was sponsored by Lexington Law
I have met so many people who are what you can call penny wise and pound foolish. They will go through great effort to save a little bit of money, yet they will spend tremendous amounts of money on things that do not bring them high value. Like paying interest for example. There are a couple of ways you can reduce the cost of your debt. Did you know almost everything in life is negotiable? I have called lenders and asked them to reduce rate on my credit cards, put me on the new customer offer, or simply switched the debt to another lender, in order to get better terms. If you have decent credit, you can often get 0% balance transfer rates for a low fee.
But one of the best ways you can save a lot of money on borrowed money is if you have great credit. Even good credit will get you decent rates, but that little increment between good and stellar credit can save you thousands of dollars. And contrary to what you may think, it is not so hard to get your credit score up a few points.
First of all, you want to make sure all the records the credit agencies hold under your name are accurate. If that is not the case, you can reach out to them, or hire a company to set things straight. They may hold wrong information, or simply have records you are not even aware of, in the case of identity theft for example. Better avoid the bad surprises when you are in front of your banker trying to get a mortgage.
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Once you have gotten your credit report repaired, the rest of the work relies on you. Building good habits to build a good credit score will help in turn build a solid foundation for your financial life. High interest debt will cripple you and prevent you from achieving other dreams. Yes, it may take a while and require sacrifices, but over the long term, it will be worth it.
There are different debt elimination techniques, such as the snowball or avalanche method, where you start by repaying the smallest debt you owe, or the one that carries the highest interest rate, and work your way from there, as you free up disposable income with every debt repaid. But the underlying goal is to make your payments on time, and pay off as much debt as you possibly can. This will translate as a strong credit history and increase your credit score over time.
If you get a new card, keeping the old one open will also help your credit, because you will have all the years of history on your side. Instead of keeping it inactive, make a small charge on it every month, and pay the balance in full.
Getting your score back up is a great idea before you apply for a mortgage or a personal loan. That will get you a better interest rate, which in turn will reduce the overall amount of debt you’ll have to pay. Remember to keep an eye on your credit regularly, as some information may be added without you knowing, and that can be detrimental to you being approved as a borrower.
Want to learn more? Get your Free E Book and Credit Consultation from Lexington Law