My Big Credit Blunders

This is a guest post by Lynnette Khalfani-Cox, host of the AARP Pay Down Your Debt Challenge, which is taking place on AARP.org through Jan. 29. Learn how to get started paying down your debt, join the Pay Down Your Debt group, and you could have a chance to win a prize.

Lynnette will have a Twitter chat on @AARPMoney. Tuesday, Jan. 10, 3-4 pm EST. Ask her questions about credit and debt issues and follow via #debtchat.

By Lynnette Khalfani-Cox

Credit and debt go hand in hand. If you manage your debt wisely, chances are you'll have a great credit rating too. Likewise, if you mismanage or abuse debt, your credit rating will surely suffer as well.

I first realized my credit was shaky back in 2001 when I was $100,000 in credit card debt. Even though I paid all my bills on time, and never missed a single payment, my credit score was low because of all the debt I was carrying.

I knew, of course, that I was carrying around a boatload of debt. But in my mind, I thought my credit rating wasn't really getting that damaged - mainly because I was diligently and consistently paying all my bills, month after month without fail. But then I checked out my credit reports and began monitoring my credit. It wasn't until 2004, when I paid off the final $30,000 of my credit card debt that I realized how much my debt was suppressing my credit score.

My score immediately jumped more than 100 points right after I repaid the final credit card debt I owed. Ever since then, I've tracked my credit score routinely; some might say fanatically. I know now that just paying your bills on time isn't enough to get an ultra high credit score, like I now enjoy. There are far more complexities to the world of credit scoring. So many, in fact, that I've written a whole book about credit, called Perfect Credit: 7 Steps to a Great Credit Rating.

Also, for fun, and some good tips, take a look at my " Will It Hurt My Credit?" quiz. There's some real eye-opening information on what things can hurt your credit score. If you have a story to share about your own credit blunders, take this week's debt challenge and  tell us all about it.

I'll be sharing my credit and debt insights with you here on AARP as you continue your journey to become debt free. And I can tell you from personal experience that one big benefit of slashing your debt is that you'll improve your credit rating too. How's that for a way to jump start your finances in 2012?

NOTE: To be eligible for the weekly and overall prizes in the Pay Down Your Debt Challenge, make sure to use the red debt tracker. The first time you use the tracker, you will see a prompt about entering the contest. Leave the box checked if you want to enter.

Here's a personal message from Lynnette about the Pay Down Your Debt Challenge.

Here's a personal message from Lynnette about the Pay Down Your Debt Challenge.