'How exactly does my debt impact my credit? What can I do to fix my credit?'
If you've been asking yourself these questions of late, Dallas, you're not alone. In this economy and during this pandemic, the struggle is most definitely real.
People have fallen on challenging circumstances when it comes to finances for various reasons (many of them obvious if we just take a moment to examine our surroundings). During these uncertain times, you never know when you're going to need credit help the most.
Even if you currently feel like you're in a stable place with your career, there is no time like the present to review your options when it comes to your financial goals. You can incur debt from many different avenues—and it's a sad fact of life that none of us are immune to emergencies. Whether you've built up debt in the form of a credit card, an auto loan, mortgage, or a student loan, the lender expects the debt to be paid back—eventually. Depending on your goals and lifestyle, it may feel like a juggling act.
If you struggle with debt, just like most average Americans, your debt level is usually at least 30% of your credit score. Having high credit card debt can not only negatively impact your credit score but also hinder your ability to get approved for new loans, credit cards, or an increased credit limit. Credit card companies are more hesitant to hand out cards and becoming more strict on their requirements due to the pandemic. This can quickly get people asking, 'How can I fix my credit?'
Even if you'd like to receive credit help and work on your credit, you may not know where to even start! We see this kind of uncertainty plague those who came to us for guidance when they already had credit cards or were saddled with high interest rate loans.
Once you get behind, that interest continues to increase your 'bad debt,' and then it may feel like you are never going to catch back up. Some people have had to take on debt to pay off bills and sometimes even other debt! When it comes to debt and your credit, it can be tricky to know which types are helpful, how to measure it, and what to pay down first.
So, Where Should You Start?
- Look at your debt-to-income ratio and WRITE IT ALL DOWN.
- It might seem scary at first, but creating an accurate list will bring you more clarity and direction.
- There is no 'short-term fix' to debt relief and instantly fix your credit short of winning the lottery (and we don't recommend pinning your future on that possibility).
Writing out the debts owed, the interest on each one, the minimum payment, and when it is due will help organize and set the foundation for success. Then your goal will be to create a strict budget—and stick to it.
- Decide whether you want to use the 'snowball' or 'avalanche' method, as they are the two most popular debt repayment strategies.
- The 'snowball' method is when you make minimum payments on all of your accounts, but use the remainder of your available budget to pay off the smallest debt first.
- The 'avalanche' method focuses on paying off the debt with the highest interest rate first. There really is no 'one-size-fits-all' method to debt relief.
If you're still asking yourself, 'How can I fix my credit?' One majorly helpful solution is to consider credit repair, as it will open up more opportunities and save you more money in the long run.
'How Do I Get Credit Help in Dallas?'
The process of credit repair ends up saving you money—think about all that interest! If you pay off a loan with 18% interest, you have effectively earned a guaranteed 18% return. The longer you take to pay off the debt, the more you’ll pay in the long run—making the debt more challenging to overcome.
With a better credit score, lenders will also be more willing to establish a higher limit with a lower interest rate. This means a lower monthly payment—and more opportunities to save for the future as you continue to pay off other debts. If you've been looking for an expert to help lead the way, you found the right Divas!
Credit Diva of Dallas can help raise your credit score to a range that will get you the best rates among lenders in the Dallas area—but that's not the only benefit we provide to those we serve! Get in touch with us to learn more about how your Divas can help you.