Cleaning Your Credit

Although a debt consolidation loan will certainly start you off on the right track, you might have to do more than get your current financial affairs in order if you really want to beat debt. Being the most conscientious borrower in the world won't mean squat to a lender if you have a tarnished credit report. So it stands to reason if you want to maintain credibility for a financially sound future, you need to maintain a clean credit report.

The Best Offense Is a Good Defense

The surest way to beat debt and clean up your credit is to prevent it from getting dirty in the first place. Given the nature of revolving lines of credit, you can easily be surprised by a bill that doesn't fit into your budget. And considering that credit card companies have their own monthly due dates and different late payment policies, it's easy to confuse one with the other and make a late payment. In addition to resulting in a mark on your credit report, the oversight will result in a late fee--which, if it pushes your next payment beyond the limits of your budget, will result in an additional blemish on your report. Instead of leaving yourself open to credit-damaging surprises, eliminate the risk with a debt consolidation loan.

Get Closure

Closing excess credit card accounts does more than remove the temptation of using them; too many open credit lines on a credit report can result in a rejected application. And rejections lead to more rejections. So after you beat debt by paying off your revolving lines of credit with a debt consolidation loan, close all but two of your credit card accounts.

Prove Yourself

While potential creditors wouldn't approve of haphazard credit card spending, they do like to see that you're capable of managing a credit account. So, if your credit report doesn't paint the rosiest picture of your borrowing habits, you can spruce it up a bit by using a credit card for budget-conscious purchases and then paying off the entire balance every month. As counter-intuitive as it may sound, it could show creditors that you're a responsible borrower who knows how to beat debt.

Be Aware

Credit reports aren't only for the eyes of potential creditors. Considering how adversely it could affect your life, you have every reason--and every right, in accordance with the Fair Credit Reporting Act--to stay abreast of what it's telling others. If you notice something that doesn't look quite right, file a dispute by sending via certified mail an explanation of the discrepancy, a copy of your credit report with the area in question highlighted and copies of documents supporting your claim to the credit reporting agency. If the dispute is decided in your favor, ask the agency to send corrections to everyone who's accessed your report within the last six months. If you really want to beat debt, taking a proactive approach is essential.

Get Confirmation

When you pay off a balance or close an account, don't automatically assume that the action is reflected on your credit report. While creditors seem to waste no time in reporting delinquent accounts to credit bureaus, it's not uncommon for them to take their time--or somehow completely forget--to provide positive inclusions. So whenever you pay off and close a credit card account, be sure to ask the company to send you a confirmation. When you attempt to clean up a discrepancy on your report, having written proof will make for less wasted time and fewer headaches.