When Repaying Your Debt Is Hard
Are you sinking into overwhelming debt? It is extremely simple to let that happen. As a beginner cardholder, you start out with a very low credit card limit. But as time passes by it typically rises. This is what makes overcharging all the more lucrative. This makes paying down debt even more difficult because of the rising balance, the compounding interest and increase in your payments.
We All Know That Debts Affect Our Credit Score But How?
Shouldn’t it be the reason for financial institutions to go easy on us? They should understand that we are going through a financial crisis and that we are honest, hardworking beings who are going to repay their money sooner or later with the interest. Well, this might be true but sadly it is not how the world functions. Your credit score is very important and yet easily affected by your debt. Owning a Mastercard credit card or a no interest rate credit card might prove to be useful in getting out of debt but it is not going to be everything you need here. Of course you want to remain debt free and for that you have been looking for low interest credit cards because you are done holding on to high balances. This negatively impacts your credit score. If you want to maintain a high credit score, you need to ensure that your account balance is well under 30% of your available credit limit. If you seek the advice of your low interest rate credit card issuer, they would suggest you to keep your credit utilization as close to zero as possible.
Other than utilizing a credit card for no credit for a more favorable credit score, you need to ensure timely payments as well. They are also vital because you just can’t afford to fall behind your billing cycle. In such a case your delinquency will be reported by your creditor after 60 days and your score will drop noticeably. If you continue to miss more payments, you will see a dramatic decrease in your credit score. It is also very important to have a strong credit score because these negative scores don’t go away from your credit report for a full 7 years!