Confessions of a Poor Money Manager

Both are worthy goals. You might be thinking the credit score is gone, but you can actually improve your credit score while you are paying off debt. By choosing the right credit cards and consumer accounts to attack first, your financial picture begins looking better and better and your credit score improves!

One of the tips included at AllBusiness.com is a reminder that credit card balances which exceed 50% of available credit are a negative on your credit score. A first step is to bring the balance on these cards to below 50% of available credit. Here’s the tip:

• Pay off the balance on the credit card with the highest interest rate first (unless the balance on any card exceed 50 percent of your credit limit). First, pay all balances to below 50 percent of the card limit because balances above this level cause your credit score to diminish.
  
• Then pay off the balance on the credit card with the highest interest rate. If the account was opened within the past year and you have additional older accounts, close it after it is paid off. Next month do the same with the card that has the next highest interest rates. Continue until you reach the credit card with the most favorable terms (i.e., low interest rates). Use this as your preferred account. You need only four open accounts to establish a positive credit history.

Your credit score is important. Once you have your spending in check and your credit cards reduced or paid off, you’ll discover open doors and cost saving rates on big ticket items i.e., insurance rates, home mortgages, job opportunities and etc.

Ashley Clayton, money management expert, providing support and guidance to pastor’s financial management ministry to their congregations.