Whatever you do, DO NOT rush to pay adebt collector! I'm going to tell you why.

It is tax time and you're probablythinking, "What is the fastest way to improve my credit by paying off debts?"Which debts do I pay off first? Which ones are going to have the most positiveimpact to my credit score? And why I need to invest my tax return in my credit!First off, if you're getting a tax return it's a great time to start thinkingabout getting out of debt, and lowering the debt that you have.

I'm going to showyou step by step move by move what you need to do to make sure that you'repaying off the right debts to increase your credit.

The first thing we'll focus on is credit card debt, the balance that you hold onyour credit card account is actually worth 30 percent of your overall creditscore.

It's a huge, significant factor.

We want to focus on paying off creditcard debt first! How are we going to do that? What I recommend you do is thatyou figure out what interest rate you're paying on each individual credit cardand then you want to focus on paying off the highest interest rate credit cardsfirst.

Now I don't necessarily want you to pay old bad or soggy debt that has beenreporting on your credit forever.

I want you to focus on paying your open activecredit card accounts! The next thing that we'll look at is personal loans, autoloans and mortgages.

If you're paying a high interest rate, like double digits, on anykind of loan, a personal loan, an auto loan or a mortgage, it is smart to pay asmuch in the beginning of the loan as possible.

The reason is becausethe way that loans are amortized, a majority of the interest is paid in thebeginning of the loan, so if you pay a significant chunk in the beginningportion of the loan, it's going to save you a lot on interest.

Next, let's talk aboutdebt collections, I never recommend that you pay a debt collector.

Unless 1.

You're at risk of getting sued or 2.

It is a debt collector for a federallybacked student loan.

The reason you want to pay back the debt collector for thestudent loan is because student loans never go away.

So when you start payingthe debt collector, what's going to happen is your student loan is going tocome out of default, so it's a good thing to pay those collections.

Paying acollections does not guarantee a credit score increase and it doesn't guaranteethat the account is going to be removed from your credit report, so it's reallynot a smart thing to do.

Ideally, you want to focus your money on your highinterest credit cards and loans.

If you don't have any open active credit cardsthen you need to watch our video on the "3 simple steps for building creditfast" I'll put a link for that below.

What kind of debt do you have? Are youcelebrating paying something off? Let us know in the comments, we'd love to hearfrom you! If you found this video to be helpful please like it, subscribe to ourchannel and leave us a positive comment below! I read all of the comments and Ilove you guys so keep up the great work and I will see you on the next video.

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