Although it is possible to get approved for a mortgage loan with a high
debt ratio, having a low credit card balance will present better
financing options. Becoming debt free is a highly sought after goal. Fewer
debt payments offer the opportunity to begin saving money. There are
several effective strategies for eliminating credit card debt. However,
before outlining a plan, consumers must be willing to alter their spending
habits.
High Credit Card Balance Contributors
If used properly, credit cards serve a practical purpose. When an
emergency arises, and you are short on cash, a credit card offers a quick
solution. Sadly, many people use credit cards to finance frivolous
purchases. This is common among young adults.
To avoid the credit card trap, consumers need to control their spending
habits. Acquiring too much debt has several repercussions. Aside from
high credit card payments, several lenders are hesitant to loan money to
people with high credit card balances.
Ways Credit Card Debt Affects Credit History
If you plan on financing an automobile or home, maintaining a good
credit history is important. Bad credit will not necessarily affect loan
approvals. However, if you have good credit, you can expect better
financing rates and options.
Some consumers think that good credit entails simply paying minimum
payments on time. While a good payment history does contribute to good
credit, the amount of debt you have acquired also plays a role.
Lenders are more confident when a loan applicant's credit card debt is
about 25% of the limit. If your credit cards are at more than half the
limit or nearly maxed out, this will result in a lower credit score.
Tips for Reducing Credit Card Debt
With self-control and effort, it is possible to dramatically reduce
your credit card debt within a year. However, before a credit card
reduction can take place, you must stop using the card.
The only way to reduce the balance is to pay more than the minimum
payments. On average, minimum payments equal the finance charges. Thus,
attempt to pay triple the minimum payment.
Try using one of ABC Loan Guide's
Recommended Debt Consolidation Companies.
Transferring the credit card balance to a zero percent interest credit
card offers great results. For a specified timeframe, every payment is
applied directly to the principle balance. No interest payments make it
possible to payoff the credit card sooner.
View our recommended companies for Bad Credit Debt Consolidation. Also, view our recommended sources for a Low APR Credit Card .
