7 tips to manage and build your credit

In our last blog post we discussed what your credit score is and why it’s important. Now that you know your credit score actually matters, what can you do to manage and maintain your credit score?

I want to be very straightforward. There is no silver bullet when it comes to maintaining or improving your credit score. Your credit score is essentially just a grade based on your credit history. You can’t rebuild a  credit score.  Think of your credit score as grade for your previous credit history.   While you cannot quickly change your score you can improve your credit history over time. Here are a few actionable tips to help you get moving in the right direction.

Pay your bills on time

It sounds so simple, but seriously, making timely payments on your bills will have the greatest impact on your score. Think about it, doing something that you are supposed to do anyway affects about 35% of your overall score. This reminds me about how supposedly filling out your info properly on the SAT was worth 600 points. While not actually true for the SAT, simply paying your bills on-time will improve your credit score. That is amazing!

If you have missed a few payments, rather than sticking your head in the sand, make at least the minimum payments today to get yourself current. This very important. Go do it now!

If you have ever fallen behind on credit card payments or other recurring bills, take this opportunity to establish an emergency fund so you don’t fall prey to the vicious cycle of debt again.

Use it, don’t abuse it

In our last post, we discussed why you should have credit. But you should not abuse credit. Credit is like booze, in moderation it can enhance your life, in excess it can be devastating.

So how much is too much? Try to keep your credit balances to 30% or less of the limit. So if you have $10,000 of available credit, try to keep the balances to $3,000 or less.

30% of your credit score is based on your your ability to keep your credit use under control. High outstanding debt can negatively affect your credit score. The higher your percentage of use, the more at risk you will be perceived.

Pay off your debt

One of the best ways to improve your credit score is to pay down your debts. Doesn’t this seem obvious? Having a very low amount of credit outstanding will make you look great to other lenders and could help improve your score.

Don’t close inactive credit cards to quickly improve your score

Many of us think that if we close credit accounts that we no longer use, doing so will improve our score. But the opposite can actually be true. Since you are closing a credit account your total available credit will go down.  If your credit balance stays the same while your total available credit limit goes down this will cause your % of credit used to go up.  And this can cause your score to go down.


One way to help this if you really want to close a credit account to reduce costs etc., perhaps the account charges annual fee, is to ask a credit company that you plan to keep to increase your credit limit before you cancel the other card.

Don’t try to create history

What do I mean? If you are new to credit, get one card. Use it and pay it off in full once the statement comes. Don’t run out and get three cards in a short timeframe. New accounts typically lower your credit score and perhaps even more so when you are new to credit. So take your time, building your credit history is a marathon not a sprint.

Shop around in a timely manner

If you are shopping around for a car loan, don’t fret about checking rates at your credit union and the dealership. Just do so in a compact amount of time. One way the credit bureaus determine if you are applying for a single loan or multiple loans is by looking at the length of time between credit checks.

Make sure your credit report is accurate

You can get a free, that’s right FREE, credit report annually from the three credit bureaus here. Take a look at your reports to see if they are accurate. Make sure the limits for your credit cards are correct and that your payments are properly accounted for. If you notice a discrepancy, work with the credit bureaus to correct the issue.

At the end of the day, being responsible with your credit should put you in a better position to borrow when the time comes. Typically the better your credit score, the better the rates offered when you are looking to borrow.  A little effort now can go a long way to helping you save potentially thousands of dollars when you need to get a mortgage or refinance student loan debt.

If you are in dire straights with your credit, you may want to reach out to a credit counselor. The National Foundation of Credit Counseling can be a great resource to find a qualified credit counselor and see if a Debt Management Program might be a good option for you.

What to know about the new credit and debit chip cards

Coming to a wallet near you: new credit and debit chip cards. They’re part of a nationwide shift by major card issuers to offer added security against fraud. The new cards look like your old cards with one exception: they have a small square metallic chip on the front. The chip holds your payment data — some of which is currently held on the magnetic stripe on your old cards — and provides a unique code for each purchase. The metallic chip is designed to reduce fraud, including counterfeiting.

Here’s how it works: To buy something in a store, instead of swiping your card, you’ll put it into a reader for a few seconds. Then you might have to sign or enter a PIN. With each transaction, the chip generates a unique code needed for approval. The code is good only for that transaction. Because the security code is always changing, it’s much more difficult for someone to steal and use.

There will be no change in the way you use your card online or by phone. That means chip cards won’t prevent crooks from using stolen card numbers to buy online or by phone. So it’s a good idea to still guard your card information closely, and check statements for suspicious activity. Your consumer protections if there’s a problem remain the same.

Banks and card issuers have been sending out new credit and debit chip cards, usually as existing cards expire or need replacement. If you haven’t gotten your new cards, don’t worry. The rollout will continue at least through 2016. If you want to know when your new chip cards will arrive, contact your card issuers at the phone numbers on your cards.

Your Equal Credit Opportunity Rights

People use credit to pay for education or a house, a remodeling job or a car, or to finance a loan to keep their business operating.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance. Creditors may ask you for most of this information in certain situations, but they may not use it when deciding whether to give you credit or when setting the terms of your credit. Not everyone who applies for credit gets it or gets the same terms: Factors like income, expenses, debts, and credit history are among the considerations lenders use to determine your creditworthiness.

The law provides protections when you deal with any organizations or people who regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in the decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must comply with the ECOA.

Here’s a brief summary of the basic provisions of the ECOA.

  • When You Apply For Credit, Creditors May Not…
  • When Deciding To Grant You Credit Or When Setting The Terms Of Credit, Creditors May Not…
  • When Evaluating Your Income, Creditors May Not…
  • You Also Have The Right To…
  • A Special Note To Women
  • If You Suspect a Creditor has Discriminated Against You, Take Action

When You Apply For Credit, Creditors May Not…

  • Discourage you from applying or reject your application because of your race, color, religion, national origin, sex, marital status, age, or because you receive public assistance.
  • Consider your race, sex, or national origin, although you may be asked to disclose this information if you want to. It helps federal agencies enforce anti-discrimination laws. A creditor may consider your immigration status and whether you have the right to stay in the country long enough to repay the debt.
  • Impose different terms or conditions, like a higher interest rate or higher fees, on a loan based on your race, color, religion, national origin, sex, marital status, age, or because you receive public assistance.
  • Ask if you’re widowed or divorced. A creditor may use only the terms: married, unmarried, or separated.
  • Ask about your marital status if you’re applying for a separate, unsecured account. A creditor may ask you to provide this information if you live in “community property” states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A creditor in any state may ask for this information if you apply for a joint account or one secured by property.
  • Ask for information about your spouse, except:
    • if your spouse is applying with you;
    • if your spouse will be allowed to use the account;
    • if you are relying on your spouse’s income or on alimony or child support income from a former spouse;
    • if you live in a community property state.
  • Ask about your plans for having or raising children, but they can ask questions about expenses related to your dependents.
  • Ask if you get alimony, child support, or separate maintenance payments, unless they tell you first that you don’t have to provide this information if you aren’t relying on these payments to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments.

When Deciding To Grant You Credit Or When Setting The Terms Of Credit, Creditors May Not…

  • Consider your race, color, religion, national origin, sex, marital status or whether you get public assistance.
  • Consider your age, unless:
    • you’re too young to sign contracts, generally under 18;
    • you’re at least 62, and the creditor will favor you because of your age;
    • it’s used to determine the meaning of other factors important to creditworthiness. For example, a creditor could use your age to determine if your income might drop because you’re about to retire;
    • it’s used in a valid credit scoring system that favors applicants 62 and older. A credit scoring system assigns points to answers you give on credit applications. For example, your length of employment might be scored differently depending on your age.
  • Consider whether you have a telephone account in your name. A creditor may consider whether you have a phone.
  • Consider the racial composition of the neighborhood where you want to buy, refinance or improve a house with money you are borrowing.

When Evaluating Your Income, Creditors May Not…

  • Refuse to consider reliable public assistance income the same way as other income.
  • Discount income because of your sex or marital status. For example, a creditor cannot count a man’s salary at 100 percent and a woman’s at 75 percent. A creditor may not assume a woman of childbearing age will stop working to raise children.
  • Discount or refuse to consider income because it comes from part-time employment, Social Security, pensions, or annuities.
  • Refuse to consider reliable alimony, child support, or separate maintenance payments. A creditor may ask you for proof that you receive this income consistently.

You Also Have The Right To…

  • Have credit in your birth name (Mary Smith), your first and your spouse’s last name (Mary Jones), or your first name and a combined last name (Mary Smith Jones).
  • Get credit without a cosigner, if you meet the creditor’s standards.
  • Have a cosigner other than your spouse, if one is necessary.
  • Keep your own accounts after you change your name, marital status, reach a certain age, or retire, unless the creditor has evidence that you’re not willing or able to pay.
  • Know whether your application was accepted or rejected within 30 days of filing a complete application.
  • Know why your application was rejected. The creditor must tell you the specific reason for the rejection or that you are entitled to learn the reason if you ask within 60 days. An acceptable reason might be: “your income was too low” or “you haven’t been employed long enough.” An unacceptable reason might be “you didn’t meet our minimum standards.” That information isn’t specific enough.
  • Learn the specific reason you were offered less favorable terms than you applied for, but only if you reject these terms. For example, if the lender offers you a smaller loan or a higher interest rate, and you don’t accept the offer, you have the right to know why those terms were offered.
  • Find out why your account was closed or why the terms of the account were made less favorable, unless the account was inactive or you failed to make payments as agreed.

A Special Note To Women

A good credit history — a record of your bill payments — often is necessary to get credit. This can hurt many married, separated, divorced, and widowed women. Typically, there are two reasons women don’t have credit histories in their own names: either they lost their credit histories when they married and changed their names, or creditors reported accounts shared by married couples in the husband’s name only.

If you’re married, separated, divorced, or widowed, contact your local credit reporting companies to make sure all relevant bill payment information is in a file under your own name. Your credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested or filed for bankruptcy. National credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that, in turn, use it to evaluate your applications for credit, insurance, employment, or renting a home.

The Fair Credit Reporting Act (FCRA) requires each of the three nationwide credit reporting companies — Equifax, Experian, and TransUnion — to give you a free copy of your credit report, at your request, once every 12 months. To order your report, visit annualcreditreport.com or call 1-877-322-8228.

If You Suspect a Creditor has Discriminated Against You, Take Action

  • Complain to the creditor. Sometimes you can persuade the creditor to reconsider your application.
  • Check with your state Attorney General’s office to see if the creditor violated state equal credit opportunity laws.
  • Consider suing the creditor in federal district court. If you win, you can recover your actual damages and be awarded punitive damages if the court finds that the creditor’s conduct was willful. You also may recover reasonable lawyers’ fees and court costs. Or you might consider finding others with the same claim, and getting together to file a class action suit. An attorney can advise you on how to proceed.
  • Report violations to the appropriate government agency. If you’ve been denied credit, the creditor must give you the name and address of the agency to contact.

A number of federal agencies, including the FTC, share enforcement responsibility for the ECOA. Visit the Consumer Financial Protection Bureau or HelpWithMyBank.gov, a site maintained by the Office of the Comptroller of the Currency, for answers to frequently-asked questions on topics like bank accounts, deposit insurance, credit cards, consumer loans, insurance, mortgages, identity theft, and safe deposit boxes, and for other information about federal agencies that have responsibility for financial institutions.

5 Tips for Building Good Business Credit

At some point, your small business may need to borrow money to grow. That means you’ll be sitting down with a loan officer or applying for credit. Without a good business credit score, chances are slim that you’ll get the funding you need.

Lendio, an online lending platform that connects small businesses to suitable loans products, has been very successful in helping entrepreneurs and start-ups in finding loan products. In fact, the company claims it achieves a 60-70 percent success rate in helping borrowers get the loan or financing they need — versus a mere 10 percent for local banks — by casting a very wide net for financial products.

The company matches eighty-five percent of borrowers that use Lendio to at least one borrowing option. What about the other 15 percent? Lendio CEO Brock Blake chalks it up to businesses with “bad credit” or, in some cases, start-ups with only “little bit of a track record.”

Build Your Business Credit Score

To avoid falling in with the 15 percent, consider these five small business tips to establish business credit and to build a great credit score.

1. Nothing Personal, It’s Just Business

Being passionate about your business and taking a very hands-on approach to its operation are typical entrepreneurial traits — nothing to be ashamed of. Just don’t let those strong connections with your start-up or small business bleed into your personal financial affairs, and vice versa.

When it comes to money, you need to cut the personal ties between you and your company. Intermingling personal and business finances could have a detrimental effect on your efforts to build business credit.

Stop putting business expenses on your personal credit card. Quit paying for equipment and supplies out of your personal accounts. If you must pitch more money into your business, make it an official loan with legal paperwork that you can only file if you follow the advice in Tip 2 below.

2. Let Your Business Stand on Its Own

Register your business as a separate legal entity. Depending on how you want to structure your business, this might mean exploring these three types of business incorporation.

To apply for a small business bank account or line of credit, banks typically require an Employer Identification Number (EIN). You can head over to the IRS and apply for an EIN.

These steps not only help keep your financial house in order — and contribute a healthy work-life balance — but they will also help shield you from personal liability, depending on how you set up your business. That way, a financial mishap, whether personal or business-related, doesn’t risk wrecking everything you’ve built for yourself and your employees.

3. Apply Already!

There’s no use putting it off. If you want to build good business credit, you need to apply and get approved for a small business credit card or loan. Be prepared to share financial particulars and answer some tough questions.

If possible, start small. When your business establishes a history of modest borrowing and paying off those obligations, you improve your chances of getting funded when bigger expenditures loom.

Also remember to look beyond your local bank, and don’t get discouraged if you’re initially declined. As we mentioned earlier, Lendio helps small businesses quickly survey the borrowing landscape to improve their chances of finding the right loan product.

4. Pay on Time

It may seem obvious, but its importance can’t be overstated.

The key to maintaining a good relationship with your creditors and building strong business credit is to pay on time. It tells them that your business is dependable and signals that it is run reliably. Conversely, a string of late payments can send interest rates soaring when it comes time to borrow again, or maybe even lead to an outright rejection.

Also, keep balances low. This not only helps keep debt manageable for you, reporting agencies take the ratio of used and unused credit (among several other factors) to determine your creditworthiness.

5. Keep an Eye on Your Credit

Finally, monitor your business’ credit score. Fraud and business identity theft are reasons enough to stay on top of your credit. More importantly, using a business credit monitoring service like Experian or Equifax helps you determine if you’re on the right track. They provide a critical perspective: how you look to lenders.

It’s also just plain responsible.

You’re always monitoring the financial health of your company, anyway. Knowing your business credit score, staying current with the items that appear on your report, and correcting them if necessary, are all vital to keeping borrowing costs low and maintaining easy access to funding for those times when you really need it.

Small Business Tips: How to Establish Credit

Small business owners are often preoccupied with developing new products or services, sales activities, establishing a place of business and other endeavors, but often they neglect something that may increase their odds of financial survival—establishing business credit. The National Association of Credit Management (NACM) recommends that small business owners take steps to establish credit in the name of their business as a way to preserve cash flow for necessary business operations, purchases and rental payments.

In order to establish business credit, in many cases small business owners must initially be willing to personally guarantee their business’s credit until credit becomes established in the name of the business. Of course, in order to extend personal credit to one’s business, the business owner or owners should have good personal credit. Therefore, getting one’s personal credit in good shape is a good idea before establishing a business.

Credit Advice from the Pros:
“You will be asked many times to sign a personal guarantee,” says Johnnie White, Credit Services Manager for Advertising with the Houston Chronicle. He continues, “Make sure you have good personal credit.” White also recommends that when credit is extended, bills be paid on time. She points out that doing so not only helps solidify your relationship with that vendor, but it also may provide you with a good credit reference when trying to establish credit with other suppliers. “If you pay us on time and we can reference for you, we will,” says White.

Dean Wangsgard, CCE, president of NACM Business Credit Services in Salt Lake City, recommends that small business owners make personal sacrifices to help pay their business’s bills on time in order to establish good business credit. “Small business owners have to be willing to go without a paycheck for a while if necessary…they’ve got to pay their bills first.”

Trish Pendleton, president/COO of NACM Nashville, Inc., notes that providing a personal guarantee to back your business’s credit demonstrates that you have faith in your company. “If you don’t have enough confidence in your company to pay that bill, why should I? What it boils down to is that I’m loaning you money for 30 days (assuming 30-day payment terms for goods or services). Why shouldn’t I ask you for your guarantee?” A personal guarantee may persuade a vendor to extend credit to a new business that it would otherwise decline. “New small business owners have to realize—if they want to start a relationship with a vendor, they have to provide a level of comfort,” Pendleton adds.

Dottie Rath, president/COO of NACM Southwest, recommends asking vendors to give credit-reporting services a reference for your business. NACM Southwest, like many NACM Affiliates, provides business credit reporting services to its members and non-members. “If you can just get one company to give you limited credit—even just $500—and have them report it to us, that will help establish your business credit,” says Rath.

Wangsgard emphasizes the importance of the availability of a sound business plan and financial statements. He believes these items can help persuade vendors to extend credit to businesses for the purchase of goods and services. A good business plan and financial reports will help assure vendors that the small business they are selling to on credit is sound and represents an acceptable credit risk.

Also keep in mind that business credit is a two-way street, notes Wangsgard. Apply the same level of scrutiny suppliers extend to your small business when managing credit to your own customers. Selling goods and services can only help a business’s cash flow if its customers pay in a timely fashion. Wangsgard points out that unscrupulous customers often seek out new businesses in order to buy goods or services on credit that other companies refused to grant. “The thing that happens to new people in business is that the bad guys will flock to them,” Wangsgard says. “You’re better off having your inventory in a warehouse rather than shipped out to somebody who’s not going to pay you. If you don’t take care of your accounts receivable, you’re going to go out of business. Every business owner needs to set up appropriate credit applications, policies and procedures in order to survive.”

Building a Good Credit Score

Every financial decision you make may impact your credit score and your ability to get a job, loan, credit cards, basic utilities and services, even rent an apartment or lease a car. Good financial choices help lenders and businesses see you as low-risk. You’ll be more likely to receive financial opportunities, including higher credit limits and lower interest rates.

Credit scores change. If you’ve never had credit or you’ve made financial mistakes, wise decisions and responsible actions, over time, will lead to a positive credit report and financial benefits.

Are you wondering how to establish credit that will improve your credit report? You’ve come to the right place.

How to build credit history that benefits you

  • Start early. The length of your credit history is a key factor in determining your credit score.
  • Start small. Lenders assume you don’t plan to live within your means when you apply for a lot of credit in a short period of time.
  • Open store charge card or credit cards to build credit. Pay your balance in full each month or keep your balance low.If you don’t qualify for a store charge card or credit card:
    • Open a secured credit card. It may allow you to use your money to establish a credit history. (For example, you contribute $300 to the card; your credit limit is $300.) Before opening a secured credit card, confirm your payment history will be reported to the major credit reporting agencies and consider fees, interest rates and the consequences of default.1
    • Have someone cosign your account or installment loan.
    • Ask a family member or friend about becoming an authorized user on one of their accounts. Credit activity on the shared account will be reported in the primary cardholder’s name and may be reported in the authorized user’s name. Use caution, poor decisions may affect both you and the primary account holder, and vice versa.
  • Don’t abuse the privilege. It’s easy to get in over your head. Make responsible decisions with your credit cards and loans.
  • Pay bills on time. All unpaid bills, including credit card, medical, cell phone, etc. will appear on your credit report and negatively impact your score.

How to rebuild your credit score

  • Review your credit report.2 Regularly review for unauthorized activity, errors and unpaid bills. Report issues immediately.
  • Create a plan. Develop a timeframe and budget for paying off current debts.
    • Contact all creditors. If possible, set up payment plans.
    • Use caution if creditors offer to “reduce” or “skip” payments. Although paying any amount, however small, is better than not paying at all, reduced payments may negatively impact your credit score.
    • Pay off delinquent accounts first, then debts with higher interest rates; you may save money
  • Consider a debt consolidation loan or balance transfers to a lower rate credit card.3 It may save you money and allow you to pay off debts sooner.
  • Research working with a credit counseling agency. Shop around for the best services, fees and plans. Be sure an agency is legitimate before providing personal or financial information.
  • Pay bills on time. After a while, it will positively impact your credit score and creditworthiness.
  • Use caution when closing accounts. It may negatively impact your credit score by shortening your credit history or decreasing your available credit.
  • Plan ahead for major purchases. High credit scores provide borrowers with lower interest rates and higher credit limits. It takes at least 6 months to improve your credit score, so plan ahead when you intend to purchase a home, vehicle or other big ticket item.

10 Tips for Paying Off Credit Card Debt

Ready to pay off your credit card debt? Here are some practical ways you can quickly tackle your maxed out cards and take your first real steps toward getting out of debt. 

1. Start by Setting a Goal

It’s important to establish realistic goals for paying off your high interest credit cards as well as other consumer debt (lines of credit, vehicle loans). While it is easy to run balances up in a short period of time, it will take time and self discipline to pay them off. Monitor your progress regularly to help you stay on track and motivated to reach your goals.

2. Put Your Cards on Ice

Sorry to say, but getting out of debt requires taking those credit cards out of your wallet so you’re not tempted to use them. Put them away, or freeze them into a bucket of ice, until you have completely paid off the outstanding balances. Paying for your purchases with cash instead of credit will help you separate needs from wants, stay conscious about your spending, and make you think twice.

3. Prioritize Your Debts – Credit Cards, Loans, Mortgages and So On…

Make a complete list of all of your debts (outstanding balances, interest rates and charges) and prioritize them in order of importance. Mortgage payments and vehicle payments are typically at the top of most lists as these provide your shelter and transportation to get to and from your job.

Priorities will be different for everyone. Many people want to get rid of the highest interest rate debts first, and others have specific debts like payday loans they want to absolve first. You should decide the order in which you will pay back your debts.

4. Trim Your Expenses to Free Up Some Cash

One way to speed up your debt repayment and get out of debt fast is by reviewing your monthly expenses and looking for opportunities to cut your costs. Start by tracking your spending for a two-week period to become aware of where your money is going. You may be surprised to learn that making your cup of coffee in the morning instead of buying a $3 specialty drink will save you over $1,000 a year! Check your spending for more ways to save.

5. Create a Monthly Spending Plan

To learn how to get out of debt and to stop borrowing from your credit cards again and again, you will need to create a monthly spending plan for your money. Not only will this ensure you are living within your means (and not way above your means, which is where credit card debt comes from), but it will also give you a set timeline on when you can expect to get debt free.

Want some help creating a plan? We’ve created an interactive, budget calculator spreadsheet that will guide you through the process and make the idea of budgeting way less painful. This will help you stay within your budget and maximize your ability to pay down your debts.

6. Use the Most Popular, Best Way To Get Out of Credit Card Debt

People have found that the best way to get out of credit card debt is to do so strategically. After paying debts that are on fixed monthly payments (mortgages, vehicle and term loans), make the minimum payments required on your credit cards with the lowest interest rates and maximize your payments on the credit cards with the highest interest rates. Once a debt is paid use this extra money to pay down the credit card with next highest interest rate. This will save you money and help you pay down all of your debts faster.

7. Another Popular Debt Reduction Strategy

The other popular method people use to get out debt is to pay off small balances first. Psychologically it shows that you are making progress. Once paid, cut up and cancel the credit card accounts. Most people only require one major credit card and perhaps one retail card with savings incentives to use during special sale events.

8. Use Savings to Pay Debt Down Faster

Many people regularly contribute to a savings plan, which is great, but consider that this is money that could help you pay down what you owe faster. Once you have established an emergency fund and are saving for irregular expenses, you may want to consider suspending extra payments to Canada Savings Bonds or other savings accounts until you have paid off what you owe. This is especially beneficial for those who aren’t saving for something specific like vehicle repairs.

The money you save by paying down your debts faster will be substantially higher than the interest you will earn in a savings plan. Also consider using income tax refunds, pay increases or other unexpected funds to pay down your debts.

9. A Debt Consolidation Loan or Balance Transfer Might be a Good Option

When used correctly, debt consolidation loans and balance transfers can be excellent ways to get out of debt.  Consider consolidating your debts with a consolidation loan or transferring your credit card balances to a low rate credit card. Carefully investigate the terms, conditions, any hidden fees as well as the overall interest savings you may realize before you commit to this solution.

Cut up and cancel your credit cards if you choose this option, otherwise you may be tempted to continue using them and further increase your debt load.

10. Refinance Your Mortgage

If you own your own home, you may have enough equity to consolidate all of your debts into your mortgage. If you don’t have much equity in your home, additional mortgage insurance costs may be expensive though. Make sure you consider all of your options and seek advice from someone other than your lender (since they have a vested interest in getting you to choose this option).

Just like with a debt consolidation loan, when you consolidate debts into your mortgage you also need to create a budget that allocates money to savings. If you don’t, you’ll always be tempted to borrow more when “emergencies” arise. Repeatedly using your home as an ATM can set you up to face retirement with a lot of debt, no assets and no savings.