How Does Credit Card Debt Effect Our Scores?

By
Services for Real Estate Pros with HOPE USA Inc.

I am often asked about how credit card debt effects credit scores. You would be surprised how paying down your credit card debt can raise scores significantly. If we allow our balance to get to 50% of our credit limit, it effects our scores negatively even though we are paying them on time. If we can pay it down below 50% we will get an immedfiate score increase. If we can pay it down below 35% we get another score increase. If we can pay the balance down to zero we get our maximum score increase. It has been suggested by many professionals that keeping the balance at $10 is better than zero.

    Many people find themselves in credit card debt. There is a way out. You have to develop a plan to get out of debt and work that plan faithfully. One suggestion is to use the "Snow Ball" plan where you pay of the lowest balance and work your way up to freedom. Another suggestion, don't use your cards every month. Make a small purchase every other month and pay it off in a few days. Don't wait for the bill to come. You are showing activity on the account but keeping the balance at zero.

 

Ron Lambright
Regional Director
HOPE USA
www.hope4usa.com
ron@hope4usa.com
We help clients coast to coast

Comments (4)

Deanna Casalino
Remax Realty Group - Estero, FL
Fort Myers Florida Homes,

Credit is not something done and then forgotten. It is something you work your entire life to improve and/or maintain in good standing.

Low credit card debt will help to improve your overall credit score.

Deanna Casalino

Fort Myers Florida Homes-Remax Realty Group

Jul 16, 2008 03:16 AM
Faith LaRosse
Springer Realty Group - Limerick, PA
Serving Berks, Chester & Montgomery Counties

Great stuff Ron,  probably 99% of the readers can use this info!

Jul 16, 2008 03:17 AM
Heather the Realtor Orlando, Lake Mary
LemonTree Realty - Orlando, FL
First Time Home Buyers, Bank Owned Homes

I had over $50,000 in credit card debt earlier this year and I am not debt free. It has taken dedication and time and especially in this business of not knowing when your next paycheck will be, it was hard, but now I sleep well in the night. It's amazing how quickly credit debt racks up.

Jul 16, 2008 03:17 AM
Rebecca Schrader
Competitive Insurance of Dundee - Dundee, FL

Paying down is the key, but a line increase will give you the same effect for the credit bureaus.

Jul 16, 2008 03:34 AM