How To Lower Your Debt-to-Income Ratio

TL;DR:

  • Understand your debt-to-income ratio
  • Pay off high-interest debt
  • Increase your income
  • Limit new credit applications
  • Create a budget
  • Consider consolidation or refinancing
  • Be patient

Your debt-to-income ratio (DTI) is a measure of how much debt you have compared to your income. Lenders use this ratio to determine your creditworthiness and your ability to repay loans. A high DTI can make it difficult to qualify for loans or credit cards, and can even affect your ability to rent an apartment. Here are some tips on how to lower your DTI:

  1. Understand your DTI. Your DTI is calculated by dividing your total monthly debt payments by your gross monthly income. A DTI of 36% or less is considered ideal, but lenders will typically approve applicants with a DTI of 43% or lower.
  2. Pay off high-interest debt. High-interest debt, such as credit card balances, can have a significant impact on your DTI. Prioritize paying off these debts to lower your DTI.
  3. Increase your income. The more income you have, the lower your DTI will be. Consider taking on a side job or asking for a raise at work to increase your income.
  4. Limit new credit applications. Each time you apply for credit, it can result in a hard inquiry on your credit report, which can hurt your credit score. Limit the number of new credit applications you make.
  5. Create a budget. A budget will help you better understand your expenses and income, and will allow you to see where you can make changes to lower your DTI.
  6. Consider consolidation or refinancing. Consolidating or refinancing your debts can help lower your DTI by reducing your monthly payments.
  7. Be patient. Lowering your DTI takes time and effort, but it is worth it to improve your creditworthiness and your chances of qualifying for loans or credit cards.

Pro Tips:

  • Consider using a debt repayment app to help you stay on track
  • Make sure to pay your bills on time every month to avoid late fees and penalties
  • Use a credit monitoring service to track your credit score and DTI

Frequently Asked Questions:

Q: What is considered a good debt-to-income ratio? A: A DTI of 36% or less is considered ideal, but lenders will typically approve applicants with a DTI of 43% or lower.

Q: How do I calculate my debt-to-income ratio? A: To calculate your DTI, divide your total monthly debt payments by your gross monthly income.

Q: Can consolidating or refinancing my debts lower my DTI? A: Yes, consolidating or refinancing your debts can help lower your DTI by reducing your monthly payments.

Q: How long does it take to lower my debt-to-income ratio? A: The time it takes to lower your DTI will depend on the amount of debt you have and your income. However, with a solid plan and consistent effort, it is possible to lower your DTI within a year.

Your debt-to-income ratio is an important factor in determining your creditworthiness. By following these tips, you can take control of your debt and improve your DTI. Be patient and persistent in your efforts, and you will see results over time.

10 Quick Tips for Repairing Your Credit

TL;DR:

  • Check your credit report for errors
  • Pay off outstanding debts
  • Keep credit card balances low
  • Don’t close old credit accounts
  • Dispute credit report errors
  • Try to negotiate payment plans
  • Limit new credit applications
  • Keep an eye on your credit score
  • Consider professional credit counseling
  • Be patient

Your credit score is a three-digit number that represents your creditworthiness. A good credit score can open doors to better financial opportunities, such as lower interest rates on loans and credit cards. However, if you have poor credit, it can be difficult to qualify for these benefits. The good news is that with a little bit of effort, you can improve your credit score. Here are 10 quick tips for repairing your credit:

  1. Check your credit report for errors. You are entitled to a free credit report from each of the three major credit reporting agencies every year. Review your credit report for errors and inaccuracies, and dispute any mistakes you find.
  2. Pay off outstanding debts. High levels of outstanding debt can have a negative impact on your credit score. Focus on paying off high-interest debts first, such as credit card balances.
  3. Keep credit card balances low. High credit card balances can also hurt your credit score. Try to keep your credit card balances below 30% of your credit limit.
  4. Don’t close old credit accounts. Closing old credit accounts can shorten your credit history and hurt your credit score. Keep old credit accounts open, even if you don’t use them.
  5. Dispute credit report errors. If you find errors on your credit report, you can dispute them with the credit reporting agency. The credit reporting agency will investigate the dispute and make any necessary corrections.
  6. Try to negotiate payment plans. If you are having trouble making payments on outstanding debts, try to negotiate a payment plan with your creditors. They may be willing to work with you to come up with a plan that is affordable for you.
  7. Limit new credit applications. Each time you apply for credit, it can result in a hard inquiry on your credit report, which can hurt your credit score. Limit the number of new credit applications you make.
  8. Keep an eye on your credit score. Keep track of your credit score regularly to see how your credit is improving. You can get a free credit score from a variety of online sources.
  9. Consider professional credit counseling. Professional credit counseling can help you create a plan to repair your credit and provide guidance on managing debt.
  10. Be patient. Credit repair takes time, effort, and patience. It’s important to be consistent and persistent in your efforts to improve your credit score.

Pro Tips:

  • Prioritize paying off high-interest debts first
  • Make sure to pay your bills on time every month
  • Use a credit monitoring service to track progress
  • Try to pay more than the minimum payment on credit card balances

Frequently Asked Questions:

Q: How long does it take to repair credit? A: The time it takes to repair credit can vary depending on the individual and the severity of the credit issues. However, with consistent effort and a solid plan, credit can be repaired within a year.

Q: What is the first step to repairing credit? A: The first step in repairing credit is to check your credit report for errors and dispute any inaccuracies.

Q: Can professional credit counseling help? A: Yes, professional credit counseling can be helpful in creating a plan to repair credit and providing guidance on managing debt.

Q: Is it a good idea to close old credit accounts? A: No, closing old credit accounts can actually hurt credit scores as it lowers the overall credit history.

Q: Can paying off outstanding debts improve credit scores? A: Yes, paying off outstanding debts can improve credit scores as it shows a history of responsible credit management.

Credit repair is a process that takes time, effort, and patience. By following the tips outlined above, you can improve your credit score and regain financial stability. Remember to check your credit report regularly, pay off outstanding debts, and limit new credit applications. With consistency and determination, you can repair your credit and achieve your financial goals.

Can You Pay to Remove a Bad Credit Report?

Bad credit can make it difficult to get approved for loans, credit cards, and even rental applications. But what can you do if you have a bad credit report that is hindering your financial opportunities? Can you pay to remove a bad credit report? The short answer is no, you cannot pay to remove a bad credit report. However, there are ways to improve your credit and potentially have negative items removed from your credit report.

First, it is important to understand what a credit report is. A credit report is a detailed record of your credit history. It includes information such as your credit accounts, payment history, and any outstanding debts. Credit reporting agencies, such as Experian, Equifax, and TransUnion, collect this information from financial institutions and use it to create your credit report. These credit reports are used by lenders and other financial institutions to determine your creditworthiness.

Many companies may offer to “fix” your credit report for a fee, but these services are often scams. The Federal Trade Commission (FTC) warns consumers to be cautious of companies that claim they can remove negative information from your credit report for a fee. It is important to understand that you have the right to dispute any incorrect information on your credit report for free.

Instead of paying for credit repair services, you can take steps to improve your credit on your own. One of the most effective ways to improve your credit is by making timely payments on your debts. Late payments can have a significant impact on your credit score, so it is important to stay on top of your payments. You can also work on reducing your outstanding debts. The less debt you have, the better your credit score will be.

Another way to improve your credit is by disputing any incorrect information on your credit report. You can contact the credit reporting agency directly to dispute any errors. The agency is then required to investigate and remove any inaccuracies from your credit report.

In addition, it’s important to check your credit reports regularly to ensure that all the information is accurate. You’re entitled to a free credit report from each of the three credit bureaus once a year. You can visit annualcreditreport.com to request your free credit reports.

It’s also important to note that negative items will eventually fall off your credit report. The length of time that a negative item will stay on your credit report varies depending on the type of item. For example, a late payment will stay on your credit report for seven years, while a bankruptcy will stay on your credit report for 10 years.

In conclusion, while you cannot pay to remove a bad credit report, there are steps you can take to improve your credit and potentially have negative items removed from your credit report. It’s important to make timely payments on your debts, reduce your outstanding debts, and dispute any incorrect information on your credit report. Remember that negative items will eventually fall off your credit report, and it’s important to check your credit reports regularly to ensure that all the information is accurate.

How to Remove a Late Payment from Your Credit Reports

TLDR:
Late payments on your credit report can have a negative impact on your credit score and make it harder to qualify for loans or credit cards. However, it is possible to remove a late payment from your credit report. Here are some steps to take if you want to remove a late payment from your credit report:

Check for errors: Make sure that the late payment on your credit report is accurate and not a mistake. If you find an error, you can dispute it with the credit bureau.

Pay off the debt: If the late payment is accurate, the best way to remove it from your credit report is to pay off the debt in full.

Write a goodwill letter: If you have a good payment history and the late payment was an isolated incident, you can write a goodwill letter to the creditor explaining the circumstances and asking them to remove the late payment from your credit report.

Consider credit counseling: If you’re having trouble managing your debts, credit counseling may be a good option for you. This can help you create a plan to repay your debts and improve your credit score.

Frequently Asked Questions:

Q: How long does it take for a late payment to be removed from my credit report?
A: Late payments can stay on your credit report for up to seven years. However, if the late payment was a mistake, it can be removed as soon as the error is corrected. If you successfully dispute a late payment, it will be removed from your credit report within 30 days.

Q: How many late payments can I have before it negatively affects my credit score?
A: One or two late payments may not have a significant impact on your credit score, but multiple late payments can have a significant negative impact.

Q: Can I negotiate with the creditor to remove a late payment from my credit report?
A: Yes, you can try to negotiate with the creditor to have a late payment removed from your credit report. You can do this by writing a goodwill letter and explaining the circumstances of the late payment.

Summary:

Late payments on your credit report can have a negative impact on your credit score, making it harder to qualify for loans or credit cards. However, it is possible to remove a late payment from your credit report. One way is to check your credit report for errors, if there’s any disputes it with the credit bureau. Another way is to pay off the debt in full. You can also consider writing a goodwill letter to the creditor explaining the circumstances and asking them to remove the late payment from your credit report. If you’re having trouble managing your debts, credit counseling may be a good option for you.

5 Extreme Couponing Tips to Cut Costs Quickly

Image Credit: Justin Lim on Unsplash


If you’ve ever used a coupon to
save on one of your favorite brands, you may have wondered just how much is possible with coupons. As it turns out, couponing is an entire lifestyle for some people, and it can be used to cut store bills down drastically – hello savings!

If you’re interested in giving extreme couponing a try, it’s important not to rush in without a plan. There are some best practices learned from the experts that require some preparation if you want to get the most out of your coupons. Let’s dive right into the process of extreme couponing so that you can start saving like a pro.

1. Learn the Lingo

The extreme couponing community has created its own language to quickly reference important ideas related to couponing. Familiarize yourself with them to be prepared for your first couponing adventure.

  • Blinkie: A coupon acquired in-store, usually next to the item on sale.
  • BOGO: “Buy One Get One.” This is a type of deal that stores offer, allowing you to walk home with an extra item for free, or for half of the price, if you buy multiple.
  • Doubling: When the store doubles your savings by matching your coupon.
  • Filler: An unneeded item that a couponer buys to make a deal work.
  • Overage: The money you can get from a store if you save so much that they owe you.
  • Stacking: Some coupons can be used together, like manufacturer coupons and store coupons, which can significantly increase your savings.

2. Collect and Organize

Of course, before you can walk into a store expecting to save big, you need to collect your coupons. There are several ways to do this, from online couponing sites to newspapers to store flyers. Explore your options and try to collect as many compatible coupons as possible.

After you’ve collected enough coupons to save big, you’ll want to organize them. Consider investing in a binder or an accordion folder so that you can keep your coupons organized and grouped in a way that makes sense. One popular way to group coupons is to keep the ones that will expire soonest closest to the front of your binder so that using them is top-of-mind.

3. Study Your Store

Unfortunately, not every store has the most generous coupon policy. Some don’t allow you to stack certain coupons or use coupons with deals. Before you walk in with a plan, check out the store’s coupon policy online or ask an employee about it. This will save you the embarrassment of being turned down at the register and feeling obligated to purchase items at full price.

If one store has strict rules, remember that you don’t have to stick with it! Explore other store options until you land on a store that allows you to coupon how you’d like to.

4. Stack Your Coupons

If your store’s couponing policy allows it, try using two coupons together to significantly increase your savings. While it’s usually not permitted to use two store coupons or two manufacturer coupons on the same item, many stores allow you to stack a manufacturer coupon on top of a store coupon.

Another way to stack your savings is to use coupons on already discounted items. If you stumble upon a BOGO deal or a 50% off deal, adding a coupon (or maybe even two) to your savings may allow you to walk away with an item for next to nothing!

5. Don’t Buy What You Don’t Need

Saving money can often feel like a game, especially since couponing can be really exciting. However, this mindset can cause couponers to purchase huge quantities of unneeded items just so that they can use more coupons.

In the long-run, this defeats the purpose of using coupons to save money and only results in collecting junk you likely won’t end up using. Before you get too excited, remember why you started couponing to begin with and try not to get distracted!

The Bottom Line

Budgeting is an essential part of a healthy financial life, but you can’t always save as much as you’d like to through budgeting alone. Couponing can be a fun and exciting supplement to your financial strategy to cut down your costs and help you achieve your savings goals.

Remember, extreme couponing will take some practice to master. Even those who do it every day are always learning. Stay focused, keep hunting, and get saving!

If you enjoyed the couponing advice above, check out Capital One Shopping’s visual below, which offers even more couponing tips to help you save big.

 

7 Methods to Eliminate Debt Quickly

Are you in a debt crunch?

If so, you probably know the stress and anxiety it can bring you and your family.

Debt is an extremely common financial situation to have. With over 95% of adults issued a credit card it can be easy to over-utilize this piece of plastic and put your financial future in jeopardy..

In this post, I’ll explore several methods you can use to eliminate debt quickly and much more. Let’s get started.

Use Side Hustles to Crush Debt

Side hustles are one of my favorite methods to reduce your debt because of how easy they can be to start.

Start by finding a side hustle that’s right for you. There are hundreds – if not thousands of potential side hustles that almost anyone can start. Finding one that you enjoy can be just a few searches away.

Once you’ve found a side hustle you’re happy with, you can use the additional income to lower your debts.

Depending on how much debt you have – this could take a few years (or more), but don’t give up.

Some of my favorite ways to flip money include driving for delivery apps, selling candles from home, flipping furniture, or working as a freelancer.

Find Other Ways to Increase Your Income

Starting a side hustle or business isn’t the only method to increase your income. Take advantage of your 9-to-5 by asking for a raise or finding another higher-paying opportunity at a different company.

If you choose to ask for a raiser – be sure to have some numbers or accomplishments to back it up. This will increase your chances of landing a higher pay.

If this is not an option for you, switching companies or industries can be an easy way to increase your income. By finding a similar job at a different company it’s possible to increase your pay anywhere from 10% to 20%.

Reduce Debts with the Highest Interest Rates First

While there are two main methods of paying off debt – the debt avalanche method and the debt snowball method – I prefer the avalanche method.

This method of paying off debt will reduce the total amount of interest you will end up paying.

If you want to become independently wealthy – you’re going to need to save as much money on interest as possible. To organize your debts, create a spreadsheet that includes the type of debt, the total amount owed, the interest rate, and the minimum payment each month. This will help you to better track which debts are getting paid off and which debts are accruing the most interest.

Take Your Budget Seriously

There’s no doubt that budgeting your money correctly can help you to pay off debt much more aggressively than those without a strict (or any!) budget.

By budgeting your money you can make better decisions with your money to help you reduce debt at a quicker rate.

How do you budget effectively?

Creating a balanced budget will require you to understand both your monthly income and expenses. To start your budget, write down all of your monthly income. Next, write down all of your monthly expenses – like your mortgage or rent payment, minimum debt payments, and other expenses like your utilities or groceries. Subtract your expenses from your income to gauge where your finances stand. If you are at a net loss, you’ll need to either find ways to cut expenses or increase your income.

Build an Emergency Fund

If there’s one thing we all know about emergencies it’s that they will happen. It isn’t a matter of “if” – it’s a matter of when they will happen.

When trying to pay off debt, an emergency can cripple any progress you’ve made on reducing your debt.

If you want to decrease the likelihood of this happening – try to establish an emergency fund if you don’t already have one. It’s a good idea to start small – maybe $500 or $1,000 then build it up over time.

This money should be used for one thing and one thing only – true emergencies. But what is considered an emergency?

In simplest terms, think of items that are unexpected – like a major hospital bill, a car repair, or dental procedure. Items like car maintenance however – should not be considered. Any repairs or expenses you can expect should instead be budgeted for.

Start a Business

Similar to starting a side hustle, starting a business can be another great way to build your income and rescue debt.

But there’s one main caveat – don’t go into more debt to start your business.

There are many small businesses you can start for less than a few hundred dollars. For example, investing in digital real estate like a website or blog can be done for less than $20.

Small businesses can require a significant amount of work to get started – but once they develop, scaling them can become easier and easier.

Stop Using Debt Altogether

This one might seem obvious – but sometimes can get overlooked. If you’re already drowning in debt a credit card can be the worst thing for your finances. By avoiding these obvious traps it can not only help you pay off your debt quicker but also avoid it later down the road.

Conclusion

By using a few of the methods above, you’re sure to start reducing your debts one month at a time.

Whether you choose to pick up a side hustle, start a business, or revisit that pesky budget – reducing your debt is going to take some sacrifices and hard work but it’s certainly possible. Stick to it and watch your debt start dwindling away. Good luck!

6 Smart Ways to Get Ready for Moving House

Moving, whether its just across town, to a new city or even to a different country altogether, its an exciting time. It’s also one of the most stressful things we can experience. There are so many things to consider, choosing a house, visiting schools, booking a moving company, arranging for passports and visas, changing addresses on all your mail… this list just seems to go on and on, there are so many balls to keep in the air. Moving can also be a very expensive, here are 6 ways to help you prepare financially.

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Beat the Heat to Save More Money

The first official day of summer has come and gone, and we’ve been having the weather to vouch for it! I’ve always preferred being hot to being cold, so I’ve never been one to complain, but having a little one at home who’s clearly uncomfortable has made us rethink our home cooling situation a bit.

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HOW IT WORKS
HOW IT WORKS