Credit Card Debt 101 – Clean My Credit Help

How to Clean Up Your Credit by Paying off Your Credit Card Debt

Credit Card companies usually set your minimum payment with this easy credit formula — 2% (times) your balance. If you want to clean up your credit and pay off your credit card debt 2% payments will never do it. A better solution to cleaning up your credit and paying off your credit card debt is paying the lowest balance card off first.

Sounds strange that you would go for the lowest balance credit card first and not the highest. But, this is the formula that the experts suggest works best to paying off your credit card debt.

Credit Card 101 Presenting Julie Alexander

Credit Card Debt 101

1. Clean My Credit – Write down all your outstanding debts
2. Clean My Credit – Number the debt according to account balances
3. Clean My Credit – The account that you labeled number 1 will get the focus until it is paid off. You will be paying the minimum balance (plus) + $25.00 (more if you can)
4. Clean My Credit – The remain debts listed will only received payment equal to the minimum payment due
5. Clean My Credit – Once debt number 1 is paid off move onto debt number 2
6. Clean My Credit – When paying debt number 2 you will be paying the minimum balance (plus) the money that was used to pay off debt number 1 (plus) + $25.00

The 9 Steps to Financial Freedom With Suze Orman

Clean My Credit by Paying Off Your Debt Illustration

• Debt 1 – Credit Card X, Total Balance $2,000 – minimum payment is $40.00
• Debt 2 – Credit Card Y, Total Balance $6,000 – minimum payment is $120.00
• Debt 3 – Credit Card Z, Total Balance $10,000 – minimum payment is $200.00
• Debt 4 – Car Note, Total Balance $15,000 – minimum payment is $340.00
• Debt 5 – Mortgage, Total Balance $160,000 – minimum payment is $1200.00 (including taxes and insurance)

Remember, our focus is on debt #1 because it has the lowest balance. Following the “Clean My Credit” steps you will be paying Credit Card X — $40.00 + $25.00 = 65.00 until the debt is repaid.

Once debt #1 is repaid move onto “Clean My Credit” step 5. You will be paying Credit Card Y — $40.00 + $25.00 + $120.00 = $185.00 until the debt is repaid.

Debt #2 is now paid off, move onto “Clean My Credit” next step. You will be paying debt #3 $185.00 +$200.00 = $385.00 until the debt is repaid.

Once debt #3 is paid, move onto debt #4. You will be paying debt #4 $385.00 + $340.00 = $725.00 until the debt is repaid.

Paying off your mortgage. Now that all your debts have been repaid you can focus on paying off your mortgage. You will be making a payment of $725.00 + $1200.00 = $1925.00 until the debt is repaid.

If you incur more debt while completing the “Clean My Credit” steps it will only delay your debt freedom. Your credit score will improve alone the process.

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