Your Tax Refund Can Improve Your Credit

There’s no shortage of ways to use your income tax refund. But how many of them provide long-term value? Instead of splurging this year’s refund, why not use all or part of it to pay off some debt. Since 30% of your credit score considers your level of debt, decreasing your overall debt load can increase your credit score.

If you can’t figure out which accounts to pay off, start with those that are hurting you the worst. If you have any past due accounts, bring them current. Pay high-balance accounts below the credit limit. If you are current and within the limit on all your accounts, then put your refund towards your high-interest bad debt.

Sacrificing your tax refund might be a difficult decision to make. Being even a little closer to a debt-free life will be worth it.