|IS MORE CREDIT BETTER|
|Posted on: Oct. 29, 2017 in Credit Score|
Common advice tells us that if your credit is bad, you’ll want to raise your score as soon as you can so that when you need to get a loan, you can. That advice doesn’t always include how to fix your credit though. You may already know that if you’re in debt you need to get out, but that isn’t as easy as it sounds (and it doesn’t sound all that easy, does it?).
You need solid tips that can have an impact on your score now. What can you do?
Credit Utilization is Key
Your credit utilization ratio is the amount you owe compared to your total available credit. This ratio is calculated across all your cards, so your outstanding balance on each card matters. Here’s how it works. Let’s say your credit limit is $1,000. If you have a balance of $500, you are at a 50% ratio. Spend $750? You’re at 75%.
Experts say that a credit ratio of 10% or lower is idea. Getting it below 30% is good and much easier to attain.
Consider All Your Cards
Building on the above example, let’s say you have three credit cards. Each has a limit of $1,000. One has a balance of $800. The other two only have $49 each on them. Your combined limit is $3,000 and your combined debt is $998. You’re below 30% so you think you’re all good. However, because that one card is at 80% utilization, your score is going to take more of a hit than if you had that divided over the three cards so they all at 30% or below. Of course, the fact that two out of three do have low utilizations does help, just not enough to offset the 80% card.
When Paying It All Off Isn’t an Option
The best way to lower your utilization is to pay off the debts you owe. But life isn’t always that easy. In the meantime, there are a few things you can do.
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