Have you charged too much on credit cards? Are you paying less toward your debts than you should? Many people are in this situation. Some ways to turn things around include:

-Budgeting – Many people design and stick to a budget to get their debt under control. A budget is a plan for how much money you have and how much money you spend.

Sticking to a realistic budget allows you to pay off your debts and save for a rainy day. Alabama Cooperative Extension has a Money Management Calendar that is a great tool for setting up a budget. Stop by your local office and grab one for free.

-PowerPay – This is a systematic way of repaying debts, developed by Utah State University Extension. To use this method, make level payments on all debts. As one debt is paid off, that payment is applied to a new debt. Visit Powerpay.org.

-Credit counseling – Creditors may be willing to accept reduced payments if you are working with a reputable program. Consumer Credit Counseling Service of Alabama Inc. is a non-profit organization formed in 1967. Call 1-800-662-6119 for the office nearest you.

-Bankruptcy – Bankruptcy is the credit solution of last resort. Unlike negative credit information that stays on a credit report for seven years, bankruptcies stay on a credit report for 10 years. If you are considering bankruptcy, contact your creditors. Let them know you are having trouble. Many creditors are willing to set up a payment plan for lowering your payments.

For improving your credit, what creditors evaluate is important. Some of the things they look at include: your credit/loan application, your credit report, your bill-paying history, how many accounts you have and what kind, whether you make payments on time, how long you have had your loans/accounts, unused portions of credit or any collection action and outstanding debt.

Source: Federal Trade Commission – Improving and Maintaining Good Credit.

Ruth Brock is an extension agent with the Shelby County Extension Office. She can be reached by e–mail at brockru@auburn.edu.