The debt snowball method is primarily aimed at credit card debt. Credit cards often come with high interest rates and can seem impossible to pay off. But, you will be able to pay off debt with this method. This method is based on the concept that you order your credit cards by their balances, from least to greatest, to decide which one to pay first.

Let’s say you have three credit cards. One has a balance of $2,000 with an interest rate of 9.9%, the next has an almost equal balance of $2,024 with an interest rate of 11.5% and the last one has a balance of $2,900 with an interest rate of 12%. The debt snowball method uses balances to determine which credit card you would pay first. Notice the two first credit cards have similar balances, but the card with the $2,024 balance has a higher interest rate than the one with the $2,000 balance. In this case, you would begin paying the card with the $2,024 balance first because the interest rate is higher which is costing you more money. If the balances are similar, you choose the card with the highest interest rate to pay first, but if there is a significant difference in balances, always start with the card with the lowest balance first, disregarding interest rates.

Take the card that you’ve decided to pay first and pay the minimum on that card plus an additional amount each month until that card is completely paid off. During this period you must be committed to making the minimum payments on your other credit cards. Once the first card is paid off you can move the the next card, applying the amount you were paying on the first card to your payment every month along with the minimum payment on the second card. Once the second card is paid off, you move to the third card and apply the same amount you were paying on the previous card to the third card along with the minimum payment and keep doing so each month until that card is paid off.

What is Internet Identity Theft?

What exactly is internet identity theft? Internet identity theft occurs when a criminal uses another person’s personal information-such as a social security number- to open a bank account, line of credit, or any other type of account or membership that requires personal information. It can also occur when the thief uses a person’s existing account information to make purchases. They will then rack up debt in the identity theft victim ‘s name, ruining their credit and leaving them to cover the costs.

How Can I Protect My Credit From Internet Identity Theft

Consumers need to take steps to protect themselves from becoming another identity theft victim. This involves being extremely cautious with how you use any personal and financial information both online and offline, but even being as careful as possible is not always enough. Because identity thieves are constantly finding new ways to gain access to this information, protecting your credit with credit monitoring is one of the best ways to ensure that your identity is safe.

Credit Bureau Monitoring Services

Credit monitoring services are extremely beneficial to those looking to protect themselves from internet identity theft. By enrolling in one of these programs, you can have peace of mind that someone is watching over your credit file every single day and keeping an eye out for any suspicious activity, including new accounts being opened or even suspicious purchases on your existing financial accounts. When you have a credit monitoring service in place, any alarming information or fraudulent activity will be reported to you immediately, and you will even have the help you need in correcting any of those problems before the thief has the opportunity to use your good credit to make tons of purchases and pile up debt in your name. This type of daily monitoring will leave your mind at rest-you can relax knowing that you’ll be notified right away if anyone does try to use your personal information to open new accounts or make purchases.

Because internet identity theft is on the rise, many new credit monitoring programs are available, so it’s simple to find the service that best fits your needs. Take a look at a few of the different options out there and compare them side by side. Review the features and benefits of each program and choose the service that fits your needs and your budget. Signing up with a good credit monitoring service is the best way to be sure that your identity is safe and to ensure that you don’t become an identity theft victim. Don’t hesitate to look over the different programs and start protecting yourself today.

Ironically, this powerful tool is often misunderstood by the consumer. This mostly stems from the fact that the formulas used to calculate your credit score are not completely disclosed by the credit bureaus. Fortunately, you can take matters into your own hands.  After the break, I’ll show you 5 simple things that will get your credit score moving in the right direction.

#1 Get a Copy of your Credit Report

It is difficult to determine how to improve your credit if you don’t know where you stand today. You can easily obtain a copy of your credit report from any of the major credit bureaus. Be sure to request a report that includes your credit history as well as your credit score. Once you receive your report review all of your accounts for any collections, liens, or accounts that do not belong to you. Collections and liens should be paid as soon as possible. This will not remove these items from your report; however, it will reflect positively that you have paid these accounts in full. As for any accounts that do not belong to you, you should file a claim with the credit bureaus as soon as possible to have these items removed. This alone can have a dramatic effect on your score if the accounts are derogatory.

#2 Get Current

If you are behind on any payments, bring those accounts into a current status as soon as possible. Paying your bills on time is the foundation of good credit history and score. All attempts at improving your credit will be wasted until your payment history is current.

#3 Pay Down Credit Cards and Other Revolving Debt

Once you are current on your liabilities, it will be time to shift your focus to credit cards and revolving debt. This particular type of debt impacts your credit greatly. Ideally, the amount of credit card debt you have on the books should never be above 25% of the total of all of your credit card limits. This is sometimes referred to as your revolving utilization, and it is nearly as important as your payment history in your overall credit picture.

#4 Keep Your Paid-off Credit Card Accounts Open

Your revolving utilization is calculated as follows:

Total Credit Card Balances ÷ Total Credit Card Limits = Utilization

By leaving your zero-balance accounts open, you are easily reducing your utilization.

#5 Do Not Open New Accounts Until Needed

The length of time your accounts have been open plays a significant role in your credit score. Accounts in good standing that have been open for a long time demonstrate your credit worthiness and responsibility. New accounts reduce the average time that your accounts have been open. Thus, you should open new accounts wisely, and only when you truly need them.

While the steps above will not boost your credit score over night, they will get you moving in the right direction. With a little time and diligence, your credit score will be on the rise ♦

So, how do you read a credit report? Here we’ll discuss how to read a credit report and fully understand the information presented.

A consumer credit report consists of four sections:

Identifying Information
• Credit History
• Public Records
• Inquiries

Identifying Information

This section contains your personal information that is used to identify you. For example, you’ll find your name, date of birth and social security number. You’ll also find your address and possibly previous addresses as well. Your spouse’s name and the name of your employer may also be shown.

Credit History

This section will include accounts that you have open with different creditors. Each account is listed as a separate entry, which will include the following:

• The date on which you opened the account
• The type of credit account (installment or revolving)
• The owner(s) of the account
• Total amount of loan or available credit as well as the total amount still owed
• Account status
• Payment information
• Payment history, or how well you’ve kept up with payments

Your credit history shows how responsible you’ve been with credit. Accounts in good standing will increase your credit score, while accounts on which you’ve made late payments or gone over your credit limit will decrease it.

Public Records

The third section, public records, shows any collection action, bankruptcies or tax liens in your name. Any information in this section is going to hurt your credit score. If this section of your credit report is blank, that’s a good sign.

Inquiries

The last section of your credit report shows entries for each time someone has looked at your credit report. There are two types of inquiries: “soft” inquiries and “hard” inquiries. Soft inquiries include those made by you and by people looking at your credit report for background check purposes. Hard inquiries include those made by creditors. Having too many hard inquiries can decrease your credit score, while soft inquiries do not affect it at all.

Having a good understanding of these sections before you read a credit report will help you determine how the information you find affects your credit score. In general, checking your credit report regularly is the best way to see how the way you’re using credit is affecting your overall credit rating.