Budgeting to Pay Off Your Credit Card Balances

Budgeting to Pay Off Your Credit Card Balances

If you have made a mess of your credit report and credit score through overspending and poor money decisions, there is still a way for you to begin to rebuild your credit score.

One of the first steps that you can take in repairing your credit report is to sign up for a credit card to rebuild credit. These cards are designed for this very situation: where a person has damaged their credit history. This is not to say that you should get this credit card and then go out and continue your bad habits of spending too much. The purpose of credit cards to rebuild credit is to give you a means to have a credit card available while you are in the process of repairing your credit report.

What you might not realize is that prudent use of a credit card is one of the easiest ways to begin to have a positive impact on your credit history. If you are able to show that you can refrain from incurring too much debt on the card, can make your payments on time every month, and can pay off the balance on the card, then you are on your way to an improved credit report. In order to accomplish this goal, you need to understand that you have to make regular payments against your credit card balance. Whenever possible, you should make more than the minimum monthly payment, as this shows that you are a responsible credit card holder.

One way to ensure you make more than the minimum payment is to create a monthly budget, using your monthly income and expenses to find your overall cash flow. If you have more going out than is coming in, you will have to find some places where you can make spending cuts. Otherwise, you will continue to get deeper into debt. To create a workable budget, you will need to analyze all of your spending to see where you can make some cuts. For example, do you really need those concert tickets? How about the weekly night out at the movies? Even cutting back to one movie outing per month can save you sixty dollars a month. That extra sixty dollars could be used to pay off your credit card balances.

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