Simple Ways to Control Your Debt and Improve Your Credit

April 24, 2018

Do you feel like your life is spinning out of control because of paralyzing debt? Are you concerned about your declining credit? If so, don’t despair. There is hope. Alpha Car Finance offers these simple ways to help manage your debts and improve your credit.

Getting Debt Under Control

When you allow debt to get out of hand, it can negatively impact your financial security. It’s harder to save for retirement and it becomes even more difficult to adjust when you’re used to living in a more lavish lifestyle. So, if you don’t want to put your future at risk, you need to start by changing your mindset and commit to living within your means.

Determine How Much You Owe

Write a list of all your debts. The list should note important details such as your creditors, the total amount of your debt, your monthly payments, and due date. It’s easier when you put them in a spreadsheet and keep track of your bills. Don’t forget to update the spreadsheet periodically.

Create a Bill Payment Calendar

It will be easier to determine which bill you need to pay each month when you create a bill payment calendar. For example, if you are getting paid every 15th and 30th of the month, you can figure out which paycheck to use for which bills.

To make tracking easier, write the amount of your paycheck and the total amount of the bills you need to pay for a specific period on your bill payment calendar. If you do not receive checks on a fixed date, you can adjust your calendar accordingly.

Prioritize Your Debts

With the help of your bills payment calendar, it will be easier for you to decide which debt you want to pay off first. Typically, you have two ways to prioritize your debts. First, you can start with your credit card bills as they often have higher interest rates. Second, you can choose to tackle the debt with the lowest balance.

Use Cash Flow to Pay Debts

If possible, use your incoming cash flow instead of your savings to pay off things like your credit card bills. This will help avoid the temptation of driving up your credit card balance again and hinder you from reaching your savings goal.

Pay on Time

To help improve your credit standing, make sure you pay your bills on time. Remember that each time you incur a late payment, it will appear on your credit report and adversely affect your credit score.

Pay Off the Past Due Balances

Another way to improve your credit standing is to pay off any past due balances you may have. Paying off these past due balances can help get your credit score on the right track.

You can pay off a handful of small past due balances or pay off one substantial past due balance. Either way, this is one of the quickest ways to improve your credit score, especially if you urgently need to apply for a loan.

Regularly Check Your Credit Score

If you want to keep track of your progress, you can go to sites like canstar.com.au or creditsimple.com.au to check your credit report. It’s free and easy to do. Moreover, reviewing your credit report is a good way to see if there are possible errors on your credit history, and then you can take steps to rectify those errors accordingly.

Pay Balances in Full

To avoid paying interest, make sure that you pay off your credit card balance in full. Even the slightest amount left on your credit card will cost you interest. Be consistent and make sure that your balance stays at zero every month after making a payment.

Eliminate Your Bad Credit Habits

Over time, you may have developed some bad credit card habits. These bad habits many include maxing out your credit cards and never paying them in full or opening new lines of credit, among others.

If you do need to use credit cards, make sure you pay them off quickly. So, drop these bad habits that can negatively affect your credit history.

We’d love to hear from you. Are you currently working on improving your credit standing and managing your debts? If so, what steps are you taking to achieve them? If you have some tips, please share them with us and leave a comment.


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