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Line of Credit Repayment

Line of credit repayment is one of the most important and effective actions that a business or individual can take. Line of credit repayment will increase your line of credit and reduce your credit costs.

Everyone who has a line of credit should remember that they pay interest on unpaid line of credit balances. This means that the amount you owe on lines of credit increases as long as they are unpaid.

If you have a $1,000 unpaid line of credit balance and are pay 12% interest annually your balance will increase by $120 a year. If you paid that balance off quickly you would save yourself $120 a year. This means that everybody should make line of credit repayment a priority.

Line of Credit Repayment will give you More Credit

Line of credit repayment will increase the amount of credit that you have to work with. When you use money from a line of credit you reduce the amount of credit available. When you payoff a portion of a line of credit you increase the amount of credit available.

The fastest and most effective means of increase the amount of credit available is the repayment of existing lines of credit. Using the funds available to increase existing lines of credit will always be cheaper and easier than seeking new lines of credit.

Line of credit repayment will show lenders that you are responsible and could convince them to increase your existing lines of credit. The same lenders might also be persuaded to grant you new lines of credit.

Paying off lines of credit will also increase your credit rating. Increasing your credit rating will make it easier for you to get more credit in the future.

Line of Credit Repayment Strategy

Creating and implementing a line of credit repayment strategy will make line of credit repayment much easier. The first step in creating this strategy is creating a budget that includes line of credit repayment.

Figure out how much money you will have available in the future and what portion of it you can devote to line of credit repayment. Try and cut expenses and budget in order to devote as much money as you can to line of credit repayment. Remember that you will have more money available in the future if you pay off your line of credit. Paying off a line of credit early will reduce credit costs in the future.

Try and pay off the more expensive lines of credit such as credit cards first. The more expensive lines of credit are the ones with the highest interest rates. Getting rid of these will substantially decrease your credit expenses and save you money.

An excellent way to get rid of high interest lines of credit is to use funds from low interest lines of credit to pay them off. This way you can reduce your interest rate and improve your credit rating because you will have paid off some debts. An example of this would be to use your home interest line of credit to payoff your credit card balances.

Line of Credit Repayment Makes SenseĀ 

Line of credit repayment should always be one of your top financial goals. The sooner you pay off your lines of credit the better off financially you will be. You will have more credit available and lower credit costs if you can master the art of line of credit repayment.