this is how empowered becomesempowerful

Part 4: Get smarter about credit

Today, most people carry some amount of debt. This may include student loans, personal loans, or credit card bills. And sometimes it may be challenging to prioritize these debts over other everyday expenses. But making a plan to manage your payments and balances can help you take control of your finances. These nine tips may help you take steps toward managing your debt and improving your credit—which means you may be on your way toward maintaining healthy financial habits that pay off in the long run. This is how empowered becomes Empowerful.

1. Always pay on time

If you’ve missed a payment, pay as soon as possible because your payment history makes up 35% of your credit score.

2. Monitor your credit regularly

Review your credit reports regularly to make sure they are accurate, and look for areas where you can improve.

3. Pay more than the minimum

Paying more than what’s due will help you pay down debt faster, save on interest expense and may improve your credit score.

4. Know your limits

Being close to or maxing out your credit limits may negatively impact your credit score, so try to keep your balance on revolving lines under 30% of your limit.

5. Know your debt-to-income (DTI) ratio

Lenders look at the amount of debt you have compared to your monthly income when extending new credit, so it’s a good idea to keep your DTI ratio under 35%.

6. Take on new debt only when needed

Having too many accounts with balances can lower your credit score an may become difficult to manage.

7. Qualify for lower rates

See if you quality for lower rates on your current debts, especially if your credit has improved or if interest rates have dropped since you originally applied.

8. Think before closing accounts

Consider keeping accounts open if they have a good payment history as closing them may lower your available credit and could hurt your credit score.

9. Build an emergency fund

Having funds set aside in a savings account can help you to avoid using credit cards for unexpected expenses.

Getting smarter about your credit by taking charge of your debt can make all the difference when it comes to preparing for long-term financial success. You can explore credit basics and different ways to manage your debt at What’s the next step on your empowerful journey? Get inspired at

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