The days are becoming sunnier and warmer. And with this time of the year, many people see it as the perfect opportunity to spring clean their houses. They might go through their closets, basement, and attic and toss items that they don’t need. Or they might head outdoors and give their back and front yard a complete makeover in preparation for spring and summer.
But although spring signals clean up time for the home, it’s also a good time to clean up your credit. If you’re fortunate enough to have excellent credit and no debt, this article might not apply to you. However, if your credit is less-than-perfect, or if you’re struggling with credit card debt, the following tips can point you in the right direction.
Some people with credit issues and debt know that they need to fix the situation, yet they don’t always know where to start. Since credit and debt influences just about every aspect of life, educating yourself is the best way to build a strong credit history — and it’s key to getting loans, credit cards and even certain jobs.
Fortunately, spring cleaning your credit is much easier than you might think. Here’s a look at a couple of possible solutions to get on the right path.
1. Use your tax refund to pay off debt
I recently heard a news report that the average person will receive a tax refund between $2,300 and $2,500 this year. Now, you can probably think of a million things to do with this money; and some people will take their refund and go shopping or buy electronics.
It’s your money, therefore, you can do whatever you please. However, if you want to spring clean your credit this year, using your tax refund to pay off debt is a good start. Let’s be honest, credit card debt hanging over your head isn’t fun. Also, if you’re behind on some of your bills, creditors may harass you day and night.
Using your tax refund not only gets creditors off your back, you’ll save a ton on interest and the less you owe, the higher your credit score. Debt amounts make up approximately 30% of your credit score. Therefore, if you take your tax refund and pay down a credit card or pay off some of your other debts, you’ll ultimately add points to your FICO rating.
2. Use a credit repair company
You can repair credit on your own. Unfortunately, it’s a lengthy and often stressful process. You’ll have to contact the creditor bureaus to dispute erroneous items on your report, and you’ll have to follow up with the bureaus to ensure that they’re actually investigating your claim. This takes a lot of time and energy.
There’s an easier way to do this. If you’re looking to spring clean your credit this season, you’re better off working with a service like CreditRepair.com, a credit repair company.
These services don’t work if there are legitimate negative items on your credit report. However, if there are questionable items on your report, a credit repair company will investigate these items on your behalf and remove any erroneous information from your credit file.
There is a monthly fee for the service. But it’s affordable and there is no contract, therefore you can cancel at anytime. Also, there are other services you can utilize, such as credit education. You’ll learn about your rights as a consumer, and receive tools and resources that’ll help you make wiser credit decisions in the future.
Repairing your credit and paying off debt is important if you’re looking to save money. Your score and the amount you owe creditors influences your interest rate on loans. Therefore, if you have a low credit score and tons of debt, you’ll pay more when you’re ready to buy a house or a car. But if you can give both an overhaul, you’ll qualify for the best financing rates — a key way to save.