You may think that a huge amount of debt and high credit-utilization ratio can be hard to come back from, but this situation can be easy to take care of if you make a plan. Dealing with your credit card payments on time and decreasing your balance are all common ways to go about improving your credit score, but you may want to look into doing a balance transfer, where you will move your balance to a new card that has a zero percent introductory rate. This offer will then be set for a certain amount of time, which can help you deal with your balance quicker. This can be a great resource to help you with your debt, but be sure to avoid a few of these mistakes during the process:
Forgetting to pay off the old card
Once you take your old balance and put it onto a new card, you may think you don't have to deal with your old account anymore. While the whole point of this process is to do away with the interest of the old card, the actual transferring could take some time to be completed. This means you will still have to make regular payments for your old card. If you forget about your other card, you could miss a payment and have to start back from square one. Look at your old account, see when the next payment is due and make plans accordingly.
Closing down the previous account
Despite the balance no longer being on this account, keep it active. Closing down the account is probably what you're thinking about doing once the transfer has been completed. This makes sense if you don't want to increase the card's balance, but if you close it, you will be wasting all the good credit you have earned and raise your credit-utilization ratio in the process.
Having no payoff plan for your new card
A card with a zero percent introductory rate can be a pretty sweet thing to have, but if you don't have a plan to eliminate your debt, you will be squandering this rate. Ask your bank or credit card issuer which is the best route for repayment. Keep in mind that if you were charged a balance transfer fee, you will have to factor that into your payments as well.
Using your new card to make expensive purchases
One of the best ways to deal with any type of debt is to have self-control. Holding yourself back from buying lunch for your buddies or getting a new TV can only help you. Your new card may be enticing to use for new purchases, but avoid the urge to use it. Your monthly payments will increase if you add any more debt to your account. Plus, your card could come with interest charges if you use your card to pay for new items.
Forgetting to make a payment
You're always told that making your credit card payments on time is the best thing you can do for your credit score. This goes for the balance transfer card too. If you're late in making any payments on this card, you could see your zero percent interest disappear. Some cards have different rules for this, so make sure to read the fine print of your card's contract. To help you remember the payment date, set up an alert on your phone or enroll in a series of automatic payments for the account.