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An In-Depth Guide on How to Pay Off Debt and Improve Your Credit Score in the Process

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Ultimate Guide to What Debt to Pay off First to Raise a Credit Score

Debt is like weight gain. To many people, an extra treat here and a little splurge there don’t seem like real problems.

Over time, though, the bits and pieces add up and one day they wake up and say, “How’d that get there?”

The good news is that it’s never too late. Paying off debt and improving a credit score are two of the most common financial goals. For people who do it right, they can score wins in both goals at the same time.

Below are answers to the most common debt and credit questions, from expert tips to what debt to pay off first to raise a credit score.

How Paying Off Debt Improves a Credit Score

Large debts and poor credit often go hand in hand. That’s why it’s great to know that working toward one goal will help with the other one as well.

Improves the Utilization Ratio

One of the many factors that impact a credit score is the person’s credit utilization ratio. This is the percentage of revolving credit that they’re using.

Revolving credit is any credit a person can use over and over like credit cards. If a credit card has a $10,000 limit, someone can use the credit, pay it off, then use it again.

It’s different from a car loan, for instance. If someone gets a $20,000 car loan and they pay off $5,000 of it, they can’t later use that $5,000 for something else.

It’s easy for people to calculate their own credit utilization ratio.

First, they need to add up the credit limits for all their credit cards. Next, they add up the balances on all those cards. When they divide the balance total by the credit limit, that’s their credit utilization percentage.

The goal should be to get a utilization ratio below 30%. However, the lower the better. Every dollar of revolving credit a person pays off will improve their utilization ratio.

Establishes a Record

Another important part of a person’s credit score is their payment record. The reason people have poor credit when they first turn 18 is that lenders have no record to tell them if the teen will pay their bills on time.

Let’s say it takes someone two years to pay off their debt. That’s two additional years of reliable payments on their record, which will improve the credit score.

Helps the Debt-to-Income Ratio

In truth, this doesn’t affect a person’s credit score directly. However, one of the most common reasons people strive to pay off debt and raise their credit score is that they’re trying to buy a home. Their debt-to-income ratio plays a large role in their mortgage qualification.

As one would expect, a debt-to-income ratio calculates the percentage of a person’s monthly income that must go toward debt. It’s based on their minimum payments, not the amount they choose to pay.

With certain debts like credit card debt, the minimum payment goes down as the balance goes down. The result is a better debt-to-income ratio.

What Debt to Pay Off First to Raise a Credit Score

It’s clear that paying off debt improves a person’s credit score in several ways. For most people, though, their debt involves several types of accounts. Here’s how to prioritize.

Bad Debt

A credit score doesn’t just look at how much debt a person has but at the types of debt they have too. They can categorize the accounts into “good debt” and “bad debt.”

Good debt includes a mortgage and student loans. Investing in a home or a degree can improve a person’s financial situation in the future, making it possible for these debts to be productive.

Bad debt, on the other hand, doesn’t have the ability to improve the person’s financial situation. That includes credit card debt and personal loans. To boost their credit score, a person should focus on bad debt before good debt.

Minding the Utilization Ratio

For someone who’s trying to pay off their debt in a way that helps their credit score the most, they should keep their utilization ratio in mind. It’s best to pay off their revolving credit before other debts.

For instance, if someone has credit card debt as well as a car loan, they should pay off their credit card debt first.

Tips for Paying Off Debt and Raising a Credit Score

Even when people know which debts to pay off first, it can be hard to figure out the next steps. These tips can help.

Higher Interest Should Be a Higher Priority

As mentioned above, it’s important to pay off credit card debt first. For people with multiple credit cards that have balances, though, they should focus on the one with the highest interest rate first.

If all the credit cards have the same or similar interest rates, it’s best to start with the one with the highest balance. This way, the person will lower their largest monthly interest charges from the start.

The Snowball Method Can Help with Motivation

In general, it’s better to pay off larger and more interest-heavy debts first. For some people, though, it’s discouraging that it will take so long to cross one debt off their list.

Those who need some extra motivation can start with the snowball method instead.

In this method, they keep making minimum payments on all their accounts but they put extra money toward their smallest debt. It’s easier to see progress and stay motivated this way.

Thinking Twice About a 0% Interest Card

There’s a common trick for paying off high-interest credit card debt. It involves applying for and receiving a new credit card that has a 0% introductory interest rate. The person transfers their debt to that card so they don’t pay interest while they’re paying it off.

That tactic is great if paying off debt is the only priority. However, it can hurt the person’s credit score in the process. For one, adding a new credit card lowers the average age of their accounts, which can hurt their credit score.

It’s also common for people who do this to close the credit card that had the original debt. If they do this, it will likely hurt their credit utilization ratio because chances are that the new card will have a lower credit limit.

Achieving a Better Financial Standing

Paying off debt and increasing a credit score doesn’t just require money. It also requires some research, like knowing what debt to pay off first to raise a credit score. The tips above can help anyone tackle their financial goals in no time.

For a more hands-on approach to credit improvement, our credit repair experts can help.

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Bears Lose Hold On Market As Bitcoin Breaks $44,000, Crypto Market Tops Up $200 Billion

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Picture of a bull with green arrows behind it fending off a bear with red arrows behind it

Bitcoin has once again recovered from what looked to be the beginnings of another bear market. The crashes had left the price of the digital asset struggling in the market, putting the bears ahead. With the recent rebound above $44,000, the bulls have obviously wasted no time in taking back control of the market. Wednesday’s fall below $40,000 now looks to be nothing but a blip on the radar.

Fear & Greed Index Breaks Out Of Extreme Fear

The beginning of the week has seen bitcoin suffer an onslaught of price dips. Dropping the value of the digital asset into one-month lows. This inadvertently played out in sentiment surrounding investing in the asset. With the dips, the Fear & Greed Index had slipped into the “Extreme Fear” territory. This prompted sell pressures of varying degrees across digital currencies in the market.

Related Reading | Just 10 Days After El Salvador’s “Bitcoin Day”, President Bukele Confirms 1.1 Million Citizens Have Chivo Wallet

Wednesday marked the lowest point of the bloodbath with bitcoin falling into the $39,600 territory. A dip that was almost immediately followed by small upward corrections pulled the price of the digital asset back into its low $40,000 trading range.

Fear & Greed Index moves out of extreme fear | Source: Fear & Greed Index on alternative.me

Thursday, on the other hand, has come with better tidings for the digital asset. The early hours of the morning featured a price rebound that added about $1,000 to the asset’s price in a couple of hours. Following this, market sentiment has shifted towards the positive. As of Thursday, the crypto Fear & Greed Index shows that sentiment has now moved out of extreme fear but remains in the fear region with a score of 27.

Bitcoin Shrugs Off The Bears

Bitcoin saw massive long positions liquidated between Monday and Tuesday as the price suffered. This contributed to the further downtrend that was experienced as Wednesday rolled around. The market crashes saw the total crypto market cap once again fall below $2 trillion. But with the recovery in bitcoin and other assets, a $200 billion addition to the market put the total market cap back up above $2 trillion.

Related Reading | Did Bitcoin Really Experience A Flash Crash Down To $5,400?

Bitcoin has now steadily held on to the $43-$44K price range. Holding off the bears long enough for the market to find its footing in preparation for another run-up. With positive sentiment gaining steam in the market, the sell pressure on the market is receding, giving way to more faith in the market.  At the time of writing, bitcoin is trading north of $43K at $43,810.

Bitcoin price chart from TradingView.com

BTC price recovers from Wednesday lows | Source: BTCUSD on TradingView.com
Featured image from BBC, charts from Alternative.me and TradingView.com
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Did The SEC’s Gary Gensler Threaten Crypto And DeFi In The WaPo Interview?

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Gary Gensler in the Washington Post

Come on, Gary Gensler didn’t threaten the industry. Of course he didn’t, but… maybe he did? If a mafia boss repeated the exact same words, there would be no doubt. And we’re quoting him verbatim. This is exactly what the Securities Exchange Commission’s  Chairman told The Washington Post. They had Gary Gensler as a guest in their “The Path Forward” series. The host was David Ignatius. They talked about “those five- or six thousand projects” that are “raising money from the public.”

Related Reading | Erik Voorhees: Selling Unregistered Securities is a Made up Crime

Yesterday, we focused on Gary Gensler’s comments about stablecoins and Evergrande. Today, the topic is fighting words… or are they? Read what he had to say and decide for yourself.

Gary Gensler Lures Crypto With Honey And Vinegar

The topic of the day, of course, is, are cryptocurrencies securities? And the head of the Securities Exchange Commission appeals to the exchanges and related platforms instead of aiming at the projects themselves. Interesting strategy. Gary Gensler explains:

“If these tokens–and there’s five- or six thousand different projects–if these tokens have the attributes of an investment contract or a note, or have attributes of equities or bonds. And in essence, one of the core issues is that there are platforms: trading platforms where you can buy and sell these tokens; lending platforms, where you can earn a return on these tokens that have not just dozens of tokens but sometimes hundreds or thousands of tokens. And it’s highly likely that they have on these platforms, securities, investment contracts, or notes or others, that fit the definition of security. Those platforms should come in, they should figure out how to register, be an investment–investor protection remit.”

Well, good luck with that. What will happen if people don’t obey your organization’s mandate, Mr. Gensler?

“I do really fear that we’ll keep bringing these enforcement cases, but there’s going to be a problem. There’s going to be a problem on lending platforms or trading platforms. And frankly, when that happens, I think a lot of people are going to get hurt.”

We’re not saying that Gary Gensler is threatening you. He’s obviously speaking about the risks of unregulated markets. However, “there’s going to be a problem” and “a lot of people are going to get hurt.” That’s what the man said.

The Definition Of Investment Contract

Here, Gensler is speaking directly to host David Ignatius:

“If you, David, ask some of the listeners from this program to give them your money, something of value. And they were relying on you, David, with maybe five or ten other entrepreneurs and computer scientists to build a platform–build a platform, that token and so forth, and they were giving it to you with an anticipation of profits. Our Supreme Court long ago said that’s an investment contract.”

And it’s hard to argue with that. However, it sounds threatening when you mix it with this:

“So, public money has a certain place around the globe. Private monies usually don’t last that long. So, I don’t think there’s a long-term viability for five- or six thousand private forms of money. History tells us otherwise. So, in the meantime, I think it’s worthwhile to have an investor protection regime placed around this.”

The newspapers went with that phrase, “I don’t think there’s a long-term viability for five- or six thousand private forms of money,” for their headlines. The markets tumbled. Some people argued that, in context, the phrase wasn’t that menacing. Maybe, but, if you mix it with something like this:

“And I think at $2 trillion, 5- or 6,000 projects, that it would be better to be inside investor-consumer protection, inside the tax compliance and anti-money laundering and financial stability.”

A crystal clear picture of the SEC’s intentions and politics emerges.

What Does Gary Gensler Think About Bitcoin?

According to the Securities Exchange Commission, Bitcoin is a commodity. Its unique characteristics make it so. Also, there’s Gary Gensler’s reverence for Satoshi Nakamoto and the fact that he taught a cryptocurrencies class at MIT. Because of all that, Bitcoiners seem to feel like they’re exempt from the SEC’s wrath. Are they, though?

When host David Ignatius asked about Bitcoin’s effectiveness as a store of value, Gary Gensler answered:

“I mean, holding a highly volatile asset–bitcoin is that. It’s a digital, scarce, I would even say speculative store of value. To hold appropriate capital, if it’s on a bank’s balance sheet, which seemed to fit into the remit that we’ve had in the past, that there be appropriate shock absorbers against the potential loss.”

That doesn’t sound like a Satoshi Nakamoto fan. Or like he appreciates Bitcoin at all. Flat out, what do you think about Bitcoin as an innovation Mr. Gensler?

“I think it’s been a catalyst for change. Nakamoto-san’s innovation, not only bitcoin as the first sort of one but this whole distributed ledger technology has been a catalyst for change that, around the globe, central banks and the private sector are looking in on how we can enhance our payment systems, and enhancing our payment systems to make them 24 hours a day, 7 days a week, real time, at lower cost.”

He did everything but say “Blockchain, not Bitcoin.” That slogan might’ve been phased out, but apparently, the idea remains. That’s actually what presumed pro-crypto regulator Gary Gensler thinks that Bitcoin brought to the world. A catalyst for the central banks and the private sector to step up their game. Wow.

Related Reading | This Is What Gensler’s Confirmation Could Mean For XRP

BTC price chart for 09/23/2021 on Bitstamp | Source: BTC/USD on TradingView.com

And What’s His Position On Decentralized Lending?

You’re not going to believe what this man thinks about DeFi lending. According to Gary Gensler:

“It’s raising new and interesting innovations around how exchanges work and how even potentially some forms of decentralized lending. We’ve had peer-to-peer lending for 15-20 years, we’ve experimented with it. This is a new type of experiment. So, those, I think, are really interesting innovations challenging the established business models.”

Oh. That’s actually a fair description of the phenomenon. Never mind, then. Carry on.

Featured Image: Screenshoot from video interview | Charts by TradingView

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SaTT Is Set to Pioneer Blockchain-based Advertising As It Unveils Its Social Media Monetization Platform.

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SaTT

Since the record-breaking $7.1 million ICO in 2020, SaTT has been making headlines in the cryptocurrency airwaves as it garners massive support towards the actualization of its long-term goal. SaTT, short for Smart Advertising Transaction Token, was launched by Atayen, Inc. with a mission to revolutionize the advertising landscape.

Coming up is an important milestone in the SaTT roadmap as the project is set to unveil the concept of Advertising Pools, or Ad Pools, this will launch alongside social network farming, which will ultimately allow companies and organizations to reward creators more transparently. Commenting on the significance of the upcoming launch, Atayen had stated that:

“To showcase proof-of-concept for the technology, Atayen is offering the first Ad Pool on YouTube for interested early adopters, entitled Proof Of Concept: YouTube Challenge. Throughout the process, Crypto YouTubers can discover the advantages of SaTT firsthand and earn the SaTT cryptocurrency with their YouTube channels.”

Upon launch, the Ad Pool will debut with a total of 100 million SaTT tokens which will be targeted at achieving a total of 5 million views. Creators will be required to meet some predefined performance-based requirements set by the firm in order to reach this milestone.

According to Atayen, Ad Pool would allow content creators to earn SaTT automatically through Post Farming, which requires them to attain a certain number of views, likes, or retweets. The SaTT token will be rewarded to creators once the prerequisites are completed, and the balance will be transferred.

As a blockchain-based advertising platform, powered by smart contract technology, all transactions will be fully automated without the presence of a  “middleman”, thereby decoupling the challenge of lack of transparency that has bewildered the traditional advertising landscape.

SaTT, A pioneer of Blockchain-based Advertising

SaTT has shown to be effective in assisting content producers in receiving fair compensation that is proportional to the number of views and interactions on their work. They are saddled with their basic responsibility in developing the best advertising solution for all parties involved, which is otherwise absent on many other prominent platforms like YouTube and traditional advertising platforms.

Taking into cognizance the lack of transparency and inefficient advertising metrics in the traditional advertising landscape, the SaTT platform committed to maintaining a fair and transparent connection between advertisers and business brands, which will ultimately eradicate fraud. Assuring that advertisers are compensated based on the efficacy of their advertising rather than for monthly subscriptions with no added value.

With the help of decentralized smart contract oracle, SaTT connects advertisers to publishers (social media influencers) together, allowing publishers to create content via these social media channels and in turn get paid for their effort based on the level of engagement derived (number of views, shares, likes, comments of the publication). The YouTube Proof of Concept which is set to launch in a few weeks will set the tune for SaTT to achieve its needed objectives.

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NFTs are Helping to Save the Environment

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Next Earth

In the last decade, there has been a growing awareness of the importance of sustainability, both locally and globally. The current growth in technology has made it possible to do more with less, which has led to the rapid expansion of the global population while at the same time causing unprecedented destruction of our natural resources.

We also have an unprecedented understanding of climate change and its effects on our world. As a result, many people are seeking ways to live more sustainably, both personally and professionally.

Protecting the Rainforest

The Amazon Rainforest is in trouble. In fact, it’s in very big trouble.

In the last few decades, nearly a fifth of the Amazon has been deforested and converted to agricultural land for purposes like soybean farming and cattle ranching. Deforestation is the leading cause of Brazil’s greenhouse gas emissions. Globally, tropical deforestation causes around 20% of annual greenhouse gas emissions.

The rainforest covers 5.5 million square kilometers (2.1 million square miles), or 40% of South America’s area. It stores an estimated 120 billion metric tons of carbon — equivalent to 10 times the carbon humans release into the atmosphere each year. Yet, humanity is still actively destroying one of the keys to life.

Amazon Watch is a leading environmental organization fighting the degradation of the Amazon. This is one of the initiatives supported by Next Earth, the project selling NFT tiles from a digital replica of Earth. With each NFT purchase, 10% is allocated to environmental organizations like Amazon Watch.

Cleaning the Oceans

Our oceans are in crisis. The rapid degradation of the environment is putting marine life in danger, and many experts believe that we may be reaching a point of no return.

As the world’s population grows ever larger and more industrialized, it has put an increasing strain on our natural resources. With over three-quarters of fish stocks fully exploited or over-exploited, and it’s expected that by 2050 there with more plastic than fish in the oceans by weight, there are serious concerns about what this means for the future of our ecosystem.

The solution to this problem is not as simple as banning plastics – although that would certainly help – it will take a major overhaul of how we live our lives to change consumer behavior. But perhaps technology can play a part too?

The Ocean Cleanup is one initiative aiming to remove plastic waste from our oceans. As with Amazon Watch, an allocation of NFT purchases on Next Earth are donated to this environmental group.

Innovative companies like Next Earth have come up with solutions that make us rethink how we consume digital content; from virtual real estate, and soon to land art, which can be bought and sold as NFTs.

These NFTs allow people to express themselves by owning unique assets, rather than just being “branded” users on social media platforms or having their data tracked online. This allows them greater control over how they present themselves online, which has obvious benefits for society beyond just looking cool: freedom from conformity improves mental health.

Ultimately, NFTs are powerful in many ways: As tools for creative self-expression, and also as ways to support your famous environmental initiatives, from cleaning up plastic in the oceans to saving our precious rainforests.

 

Photo by Shai Pal on Unsplash
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Scammers Alert: BTC Scammers Loot $69K Via Fake iPhone13 Event

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Scammers Alert: BTC Scammers Loot $69K Via Fake iPhone13 Event