Good credit management requires that you preserve current status on all accounts, reduce debt and maintain the proper mix of accounts. Sometimes, you need debt management to accomplish all of these things.
Current Account Status
The most important impact on your credit score is your payment history. Even if you have late payments in the past, it is important that all of your credit accounts be currently paid on-time.
If you are late and are unable to get caught up with payments on your own, then you should ask a qualified credit counselor how to re-age your accounts. This means that you could bring those accounts to current status without having to make double or triple payments to get caught up. This is one benefit commonly available through debt management.
Reduce Debt Balances
Another major factor affecting your credit score is your debt load. This can affect you in two ways.
First, your total debt can influence your credit score. High revolving balances can cause your credit score to be low. Creditors see this as a higher risk factor.
Secondly, the percentage of your available credit that you are using can also be a major factor. According to Fair Isaac Corporation, any card where your balance exceeds thirty percent of your credit limit will cause a drop in your credit score.
If you have high balances on your credit cards, then you really need to reduce those balances quickly. This saves you money while improving your credit. Sometimes you may realize that you have been making payments for several months or even years, yet your balances do not drop. If you cannot increase your payments, then you should consider meeting with a credit counselor. They can help you with a debt management plan to reduce your debt and improve your credit.
Proper Account Mix
A large number of revolving credit card accounts can also influence your score negatively. Installment accounts on cars and homes can help improve your mix of credit accounts and increase your score. These big ticket items are only available if you successfully can reduce your debt, maintain your payment history and improve your credit score.
To successfully manage your credit, maybe it’s time to see about a debt management plan. If you have been trying unsuccessfully to reduce debt on your own, it will not get easier unless you ask for help. Its OK. Get the help you need to manage your credit and your debt.