Paying Off Debt and Building Credit
Paying Off Debt and Building Credit
Using a credit monitoring tool to see your bank accounts, credit cards, and loan balances all in one place helps to remain accountable for yourself and your credit score. I can easily keep track of where my money is actually going, as well as identify if there’s an account with a balance I can quickly pay down, or refinance for a lower interest rate. “Snowballing” debt payments is a really good trick to use! I’ve paid off one credit card and am using the money I no longer need for that payment to pay down my student loans faster. Although getting out of debt can be difficult, I’ve been able to slowly increase my credit score while also helping my husband increase his so that we were able to buy our dream home just this year. This is our family in our new home’s kitchen!
MilSpouse Money
Mission Response:
Congratulations on your new home and what a beautiful family Celeste. A big goal, like buying a house, takes planning, saving and sacrifice. As Celeste points out, major purchases often require financing and good credit scores can improve the lending terms. Your eligibility and terms are based on several factors including past credit usage and current levels of debt. The higher your credit score, the better your interest rate may be, saving you money!
Celeste discusses two important and interrelated tips in her tip – debt management and understanding credit. First, list all your debts and include current balance, minimum payment, and interest rate. To save money and pay down your debts quickly, consider using the snowball or avalanche methods. Check out our Snowball and Avalanche debt elimination calculators to see how much you can save!
Your FICO credit score is a number from 300 to 850 that helps lenders determine if and at what rate they will offer you credit. A credit score is based on several factors including payment history, how much you currently owe, and the types of credit you have. It takes time to build up your credit score, so stick with it! Remember, you can request a free copy of your annual credit report from the Annual Credit Report Request Service. Service members are also eligible for free credit monitoring, make sure to use this important tool in your financial toolkit!
