In our previous post, we shared the 3 things nurses should know about debt. Now that you have the background on debt, here’s what you can do to pay it off more quickly and improve your credit.
Before you get started, get an idea of what state your credit is in currently. To check your credit score and find out where you’re starting from, you can check credit score for free at Credit Karma. Many credit card companies offer this as a service too. You can get one free credit report for free per year at Annual Credit Report.
How to Pay Off Credit Card Debt ASAP
Stop adding to your credit card debt
Our expert guest on the webinar, Catherine New, says the first step to paying off debt is setting boundaries that stop increasing it. Remove temptation in whatever way possible, whether that’s unlinking your online cards, switching to a debit card, or just not carrying your credit card in your wallet.
Use a payoff strategy
We all have a different approach to money, so choosing a payoff strategy that works for you is a great route to pay off debt. The two strategies Catherine outlines are Avalanche, where you start with the highest rate and chip away at that, or Snowball, where you start with the smallest debt and work your way up. While some may appreciate knocking out their nursing student debt in full before moving on, others may get more satisfaction from a series of smaller wins along the way.
Make multiple payments each month
You’re not limited to making a single payment per month. Catherine recommends that every time you get a little extra, you use it for your balance.
Consolidate your debt
Consolidating your debt can make it easier to manage than keeping track of payments on multiple accounts. Consider getting a personal installment loan or transferring your balance to one card. With debt consolidation for nurses, you’ll have fewer interest rates to pay, saving you money. But make sure you read the fine print to avoid any hidden fees.
Call your company and ask about reducing your rate
It can feel like your credit card company is working against you, or just doesn’t care about your concerns. But most credit card companies actually want to work with you, especially the larger, more reputable ones. Try calling to ask for a lower rate.
How to Build and Maintain Your Credit
Make on-time payments
Not only is being on time a great professional skill, but it will show lenders you can handle your debt. Making your payments on time will also help you avoid late payment fees.
Pay your balance in full
Rather than carrying a balance, whenever possible make complete monthly payments on a loan or credit card. This will show lenders you are only spending what you can afford. Your credit score goes up when you pay your balance in full.
Don’t utilize all your credit
Utilization is your balance compared to your credit limit, or how much you’re allowed to spend versus how much you’re actually spending. Low utilization can raise your credit score, so it’s important to keep an eye on your borrowing. The rule of thumb in the industry is to keep your credit card utilization below 30%. So if you have $10,000 available, try not to borrow more than $3,000.
Keep old accounts active
If you have an old account open that doesn’t cost you any money, keeping it open rather than closing could be a positive mark on your credit score. Even if you no longer use the card, it shows a longer history of your credit, and would be counted towards your utilization. Closing an account will also sometimes cause a small dip in your credit score.
Open new accounts
Showing that you are continuing to open up new lines of credit is a positive sign for credit bureaus. However, do not open too many accounts at the same time, as hard requests for your credit score will actually bring it down.
Have both revolving and installment credit accounts
Revolving credit is credit that is automatically renewed as you pay off your debt, like a credit card. Installment credit is a loan for a fixed amount, like your student loan or a mortgage. Having a mix of both is viewed favorably by credit bureaus, and will help raise your score over time.
Now that you have the tips, it’s time to tackle your debt and raise your credit. If you still have questions, watch the full webinar for more details and a Q&A with Catherine New.
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