Let me suggest some common sense ideas that many of us already execute and a few others some folks might not necessarily think about as regards their credit scores. I'll begin with the ones we generally already carry out:
-- Always pay when payment's due. Each time you're late, your credit score slips a little more. In the words of Redbook's experts, not only does paying on time help determine the interest rate you'll get on future loans, but also whether you get the loans at all! (Note: the new Credit Card Act states if the payment due date falls on a weekend or a holiday when the bank doesn't accept or receive mailed payments, then any mailed payment received by the bank before the cutoff time on the next business day would be considered an on-time payment.)
-- Track interest rate. Make a list of all non-mortgage loans from high to low interest rate. Each month, pay any and all extra cash towards the highest rate and pay the
minimum on the others. As you pay the first one off, then start the process over again and repeat until all loans are paid.
-- Request a lower interest card. Let's say your American Express's percentage rate is 9.35; you call and the bank offers 6.35 percent. Load all other credit cards onto this lowest one so you're paying only one card. (If by chance you're paying any federal student loans, then check with www.brinfo.org or Income-Based Repayment that allows you to pay what you can rather than how much you owe. I wish they'd had this opportunity 40 years ago.)
-- Pay $20 more each month. Stop drinking one Mocha Cappuccino per week and, if you've a balance of $1,000 at 16 percent interest, you'll save $400 in interest and pay off your loan four years sooner. So just think what you can do with a couple or three less coffees and a higher-price loan.
And now for the initiatives that might not come so easily to mind:
-- Use your savings to pay off high-rate debt. The days of 8 percent to 10 percent interest on one's savings are long gone. With credit card interest at least that high, doesn't it make more sense to use the money you've parked in a savings account to pay towards the loan?
-- Forget cash advances. I'll never forget an embarrassing lesson I learned about 25 years ago. A few couples traveled to Atlantic City but my dreams of a slot jackpot rapidly slipped down the drain. So I casually walked over to the cashier to get $100 cash advance on my husband's Visa.
The next thing I knew, I heard a loud plea over the intercom, "Mr. _____ Phillips, please come to the cashier to approve your wife's cash advance." As soon as we got home, I applied for my very own credit card and he's now on my account.
-- Never use more than two major credit cards. How often does a cashier offer you a discount for signing up for a store card? Just say "NO," which not only saves you another card on which to charge, it also saves a pile of new interest fees, and negates having to write down your Social Security number -- a real no-no.
-- If you find yourself in a financial hole, then crawl out. Get help from www.debtadvice.org. I've suggested nonprofit credit counseling in the past and this site will refer you to one who can negotiate a reduced monthly balance.
P.S. Thanks to last week's readers who caught my credit-score monitoring mistake. I should have written credit-report monitoring.
Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears on Saturdays in the Business section of the paper. E-mail her at email@example.com.