Repaying your debt can often feel challenging. That’s why making a plan to manage your payments and balances can help. Take a look at these tips and discover some small steps you can take today that may make managing your debt easier.
Always pay on time
Payment history makes up 35% of your credit score. If you’ve missed a payment, pay as soon possible — it makes a difference. Credit reports will track if you are 30, 60, or 90 days late on payments.
Monitor your credit regularly
Review your credit reports regularly to make sure they are accurate, and to look for areas where you can improve. Order yours free at annualcreditreport.com. Credit Close-Up® offers eligible Wells Fargo Online® customers complimentary access to their FICO® Score. Don’t worry, requesting your score or reports in these ways won’t affect your credit score.
Pay more than the minimum
Always try to pay more than what’s due. This helps to pay down debt faster, save on interest expense and may improve your credit score.
Know your limits
Being close to or maxing out your credit limits may negatively impact your credit score. It’s a good idea to keep your balance on revolving lines under 30% of your limit.
Know your debt-to-income (DTI) ratio
Lenders look at the amount of debt you have compared to your monthly income when extending new credit, so it’s a good idea to keep your DTI ratiounder 35%.
Take on new debt only when needed
Apply for and open new credit accounts only if you need them. Having too many accounts with balances may lower your credit score and may become difficult to manage.
See if you qualify for lower rates on your current debts, especially if your credit has improved or if interest rates have dropped since you originally applied. Wells Fargo customers can use the Check my rate tool to get rate and payment estimates, with no negative impact to their credit score.
Think before closing accounts
Closing credit card accounts may lower your available credit and could hurt your credit score in the short term. Consider keeping accounts open if they have a good payment history and a low or zero balance.
Build an emergency fund
Having funds set aside in a savings account may help you to avoid using credit cards for unexpected expenses.
Need help?
Contact the National Foundation for Credit Counseling (NFCC) in person, online, or by phone for in-depth, personalized financial counseling and education.
Explore different ways to pay down debt
We have options to help make your payments more manageable and may help to pay off your debt faster.
Before you apply, we encourage you to carefully consider whether consolidating your existing debt is the right choice for you. Consolidating multiple debts means you will have a single payment monthly, but it may not reduce or pay your debt off sooner. The payment reduction may come from a lower interest rate, a longer loan term, or a combination of both. By extending the loan term, you may pay more in interest over the life of the loan. By understanding how consolidating your debt benefits you, you will be in a better position to decide if it is the right option for you.
Fair Isaac: Certain information provided by Fair Isaac Corporation, San Rafael, California.
You must be the primary account holder of an eligible Wells Fargo consumer account with a FICO® Score available, and enrolled in Wells Fargo Online®. Eligible Wells Fargo consumer accounts include deposit, loan, and credit accounts, but other consumer accounts may also be eligible. Contact Wells Fargo for details. Availability may be affected by your mobile carrier's coverage area. Your mobile carrier’s message and data rates may apply.
Please note that the score provided under this service is for educational purposes and may not be the score used by Wells Fargo to make credit decisions. Wells Fargo looks at many factors to determine your credit options; therefore, a specific FICO® Score or Wells Fargo credit rating does not guarantee a specific loan rate, approval of a loan, or an upgrade on a credit card.
FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.
There are a number of debt management strategies that can be implemented to accelerate wealth accumulation involving cash flow, repayment and consolidation.
This review process is based on a review of five key factors that predict the probability of a borrower defaulting on his debt. Called the five Cs of credit, they include capacity, capital, conditions, character, and collateral.
It will take 47 months to pay off $20,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
To pay off your balance of $3,000 in 12 months, you will need to make monthly payments of $262 and make no additional charges to your card. If you make monthly charges of $0 and monthly payments of $100 you will pay off your balance in 34 months or 2.83 years.
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Payment history makes up 35% of your credit score. If you’ve missed a payment, pay as soon possible — it makes a difference. Credit reports will track if you are 30, 60, or 90 days late on payments.
Review your credit reports regularly to make sure they are accurate, and to look for areas where you can improve. Order yours free at annualcreditreport.com. Credit Close-Up® offers eligible Wells Fargo Online® customers complimentary access to their FICO® Score. Don’t worry, requesting your score or reports in these ways won’t affect your credit score.
Always try to pay more than what’s due. This helps to pay down debt faster, save on interest expense and may improve your credit score.
Being close to or maxing out your credit limits may negatively impact your credit score. It’s a good idea to keep your balance on revolving lines under 30% of your limit.
Lenders look at the amount of debt you have compared to your monthly income when extending new credit, so it’s a good idea to keep your DTI ratio under 35%.
Apply for and open new credit accounts only if you need them. Having too many accounts with balances may lower your credit score and may become difficult to manage.
See if you qualify for lower rates on your current debts, especially if your credit has improved or if interest rates have dropped since you originally applied. Wells Fargo customers can use the Check my rate tool to get rate and payment estimates, with no negative impact to their credit score.
Closing credit card accounts may lower your available credit and could hurt your credit score in the short term. Consider keeping accounts open if they have a good payment history and a low or zero balance.
Having funds set aside in a savings account may help you to avoid using credit cards for unexpected expenses.