Debt can actually be a good thing—if you know how to manage it properly. When you take out a loan and make payments on time, you build a credit history and increase your credit score. That makes you eligible for bigger loans like mortgages or business loans, or premium credit cards with low-interest rates or better rewards.

Here are the secrets for managing your debt in a way that will improve your score.

6 Helpful Tips For Managing Your Debt

1. Pay All Bills On Time

This is one of the most important aspects of managing your debt. Late payments will lower your credit score and incur late fees. Some credit cards also increase the interest rate and finance charges if you miss several payments in a row.

To avoid missed payments, use your computer or phone’s calendar system to send notifications about due dates. You can also download free finance apps with this function.

If you think you will miss a payment, or accidentally forget it, call your creditor to request an extension. They will usually grant this if you pay regularly.

2. Prioritize Debt With High-Interest Rates

If you are managing your debt from different credit cards and need to decide which one to pay off first, prioritize the one with the highest interest rate. Always pay off the charges in full, or at least try to make more than the minimum payment.  Since the interest rate is high, any outstanding balances are going to cost you more.

3. Watch Your Credit Utilization Ratio

This is one of the factors used to compute your credit score. Simply put, it is your actual debt divided by the total credit available.

For example, if your credit card has a limit of $10,000, and you have a balance of $3,000, then your credit utilization ratio is 30%. If you have several credit cards, add all the credit limits and all the outstanding balances.

The credit utilization ratio is a big factor in your credit score. So, one of the most important aspects of managing your debt is to keep this score as low as possible.

4. Don’t Cancel Your Oldest Accounts

One tip for managing debt is to avoid having more credit cards than you need. You spend less on annual dues, and you’re not as tempted to overspend. Look at your cards and see which ones you can cancel—especially if it doesn’t offer any concrete rewards or discounts that you use regularly.

However, don’t cancel your oldest cards. That’s because older cards have a longer credit history, which can bring up your credit score. Aside from that, credit card companies are more likely to give rewards or agree to extensions if you are a long-time customer.

5. Get A Copy Of Your Credit Report

Just like doctors need to get lab tests to diagnose a problem and prescribe the right medication, you need to get a credit report to know the impact of your debt on your credit score and take the right steps.

You are entitled to one free copy of your credit report every year. It can give you your current score, and the reasons for it. Be sure to check for any errors in the report that could have dragged down your score. The most common errors are mistaken identity, or failure of creditors to report payments.

6. Take Out Different Kinds Of Loans

Another aspect of managing your debt to increase your score is to have a good credit mix. Aside from responsibly using credit cards, you also have taken out loans and paid them off on time.

For example, you can take out a flex loan (also called a line of credit loan). Just like credit cards, you are given a maximum credit limit.

The Benefits Of Flex Loans Are:

• You can borrow money anytime
• You only pay interest when you borrow
• Once you pay off the loan, the credit is available again

A flex loan gives you money on demand and can help you build your credit score.

The Process Of Getting A Flex Loan

It’s also really easy to get one, especially through Tennessee Title Loans, Inc. You don’t need to have a high credit score to qualify—and our in-store flex loan or line-of-credit process only takes 30 minutes, so you can access the money right away.

Just fill out the online form, and one of our loan representatives will call you to explain how it works and if you qualify. Then, go to the nearest branch with your ID, your latest pay stub or other proof of income, a lien-free title, and your vehicle for inspection.

A loan representative will inspect the pay stub and vehicle to determine your credit limit. After this step, you just need to sign a few final documents and your flex loan is ready to use.

Get A Flex Loan Now

Managing your debt is important and will make you feel good about your financial situation, and possibly even your general well-being. For those times when you are faithfully managing your debt and an emergency comes up, a flex loan has you covered! Fill out the inquiry form to find out more about flex loans and our other loan packages or visit one of our many branches in Tennessee.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.