Credit Utilization Blues

Credit utilization, which is how much of your available credit you have used, is one of the factors in your credit score. It is also known as debt to credit ratio, because credit reporting bureaus do not measure it purely by the face value of your outstanding credit card balances. Instead, they look at your credit limits on credit cards and revolving lines of credit, and then they consider how much of that you are carrying as a balance. For example, if your credit card has a $5,000 credit limit, and your balance is $4,000, then your credit utilization is 80 percent. It is not the same as purely measuring your available credit. Someone whose credit limit is $40,000 but whose balance is $36,000 has a 90 percent credit utilization, so your credit utilization is better. The lower your credit utilization, the better. There are various formulae for calculating credit scores, but according to the Vantage 4.0 metric, credit utilization counts for 20 percent of your total credit score. For help strategizing about how to lower your credit utilization, and therefore how to improve your credit score, contact a Jupiter credit repair lawyer.

Lowering Your Credit Utilization: Solutions for Rich People

As with so many financial matters, the greater your financial resources, the more opportunities you have to lower your credit utilization. These are some of the strategies you can use to reduce your credit utilization, making yourself appear more trustworthy to lenders:

• Spend money from your checking account instead of making purchases on credit cards.
• Pay down your credit card balance as early in the billing cycle as possible, even if you cannot pay it all the way down to zero.
• If you have multiple credit cards, keep them open, even if you have no plans to make purchases on them.
• Decrease your spending in general and put more of your income toward paying down your credit cards.
• Request a credit limit increase.

Lowering Your Credit Utilization: Solutions for You

These strategies only work if your finances are already in decent shape. As for you, you have probably tried all of them unsuccessfully, and they either didn’t help, or else your unsuccessful attempts to reduce your credit utilization made your credit score even worse. Your best options could be a credit card balance transfer or a debt consolidation loan. Neither of these will boost your credit score immediately; your credit score might even get worse before it gets better. These strategies will help you pay down your credit card debt less expensively in the long run, because you will pay less interest. Your other options are to settle your debts for a lesser amount or file for bankruptcy, but if you do these things, it will be a long time before your credit score recovers.

Work With a Debt Lawyer About Reducing Your Credit Utilization

A South Florida debt lawyer can help you lower your credit utilization so you can raise your overall credit score.  Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.

Source:

creditkarma.com/credit/i/how-to-lower-your-credit-card-utilization