n Manage your credit usage. Stay agement tips (like the ones previous- ule, the snowball effect will take
up to speed on all the accounts ly mentioned), and refer to it often. over, slowly clearing those debts.
you have open at any one time, n try calling your debtors and ex- n once free from debt, celebrate —
and know your balances. Don’t use plaining your situation and your within reason. from here on out,
credit just because you have it. ac- debt-payment plan. companies live beneath your monthly income.
counts that are nearly maxed out or might agree to lower payments or Pay yourself first by setting up an
all the way there indicate you might suggest another payment option. automatic payroll deduction into an
be living on credit. credit is not they often prefer delayed payments emergency savings fund or a retire-
meant to be a way to finance your to none at all. ment account. tightly control your
life but a luxury to be used with n Use the table below to consolidate credit usage.
care and selectivity. and eliminate debt. first, rank your
n Get a copy of your credit reports. debts (credit cards, car loans, mort- calling in the pros
find your current credit score so gages, etcetera) from those with the if you are overwhelmed, get help
you know your status and where you highest interest rates to those with with your credit problems. check
should focus your attention. remem- the lowest. each month, pay the out the National foundation for
ber, you won’t have to close accounts minimum monthly payment on all credit counseling (
www.nfcc.org)
to improve your credit score. Having debts except for the debt with the or call your BBB (
www.bbb.org) for
unused open accounts can help your highest interest rate. Pay as much as reputable credit agencies in your
credit score by lowering your ratio of possible on this debt to eliminate it area. credit counselors can help
credit available to credit used. But, as soon as possible. When this debt you develop a personalized debt-
given the state of credit today, some is eliminated, you’ll be able to put management plan.
credit companies are closing unused its former monthly payment toward if you choose to select your own
accounts or lowering credit limits. paying off the next debt on the list. credit-counseling service, be care-
these lower limits can result in a if you stick to this payment sched- ful. there are [coNtiNUeS oN PaGe 79]
lower credit rating by
making it appear you’ve Interest Rate Initial Payment First Card Second Card Third Card
used up more of your Min. Payment Schedule Eliminated Eliminated Eliminated
available credit.
16%
+$25
Gas Card
extra
$50 0 0 0
damage control
$25
What can you do if you 15%
Credit Card #1 $20 $70 0 0
already have a terrible $20
credit score?
15%
Paying off your debt Credit Card #2 $20 $20 $90 0
$20
must become a prior-
ity in your life. Debt 12%
Credit Card #3 $15 $15 $15 $105
will own and con- $15
trol you until you rid
6%
yourself of it. it might Auto Loan $300 $300 $300 $300
$300
take some willpower
to skip dinners out,
Total Monthly Payment $405 $405 $405 $405
weekend movies, and
your morning coffee at
Starbucks, but you’ll soon be back
on track with the financially respon-
sible folks out there. follow these
easy guidelines:
n take action immediately. over
time, your credit score will improve
as your positive actions begin to out-
weigh the negative ones.
n Make a list of credit rules and man-
december 2009 Military officer 61
Dec_credit.indd 61 10/28/09 2:32 PM
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