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Tips for Managing Debt

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 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 ratio under 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.

Qualify for lower rates

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.

DTI Ratio: Less than 35%

Relative to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you've paid your bills. Lenders generally view a lower DTI as favorable.