Good Debt vs Bad Debt

The first step to knowing what is good debt and bad debt is understanding your credit.
The next step is to dissect your credit file. The good credit can be maintained by paying
credit cards and revolving lines of credit more than just once a month.
This does a few things for you. It eliminates interest, reports a smaller balance to the credit bureau, and it ultimately reports your score more accurately. Doing this allows the bureaus not to hold valuable points that you need to see reflect on our credit score.
Another way to keep your credit file in good standing is to keep your balances below a 3rd of what you owe. Of course with mortgages and car loans you will need to approach it a little differently. You can shave off nine to 12 years off the life of your mortgage by paying biweekly. This also depends on the term of the loan. With car loans you can shave off about a year to eighteen by paying it bi-weekly. If you use your higher balance credit cards to pay of the smaller ones off. This minimizes how many cards your paying on monthly. Some people feel that this is not possible because of the higher interest rates. All you have to do is add a little more to your regular monthly payments.

Turning your bad debt into good debt can be very discouraging. Especially when the collection agencies don’t want to accept the payment arrangement that you can afford. They like to dictate what you can pay without knowing your circumstance. It makes the collection agencies work with you when you volunteer to make arrangements versus waiting on them to make those harassing phone calls to you. When the call is generated to you, they have the upper hand of controlling how you pay the bill. When you call them you can guide them with arrangements that better fit your budget. It is better to take a few of those collection items and divide them by six to nine months and pay them off. If you have larger collection items, they may take longer than six to nine months to pay off. Half way through paying on those debts, it is sometimes possible to get a settlement. When you pay collection items off a few at a time, at least your allowing yourself to slowly get out of debt versus eating away at the positive credit you still have remaining.

Set down and right out a budget of both the good and bad credit. realistically plan to get out of debt and turn the derogatory credit into positive credit. Don’t be afraid to call your creditors and ask for payment arrangements. Be aware of your credit all the time there are companies like Triple Advantage and ID Theft Shield(through Pre-Paid Legal) that can help you monitor your credit file on a monthly bases. These credit monitoring programs cost about $12.95 a month and will notify you when there has been changes to your credit report whether it is good or bad.