Credit Card Utilization Affects Credit Score
There are many things that you can do to improve your credit score and get a quick
boost in score.
One of these things involves your credit card utilization, otherwise
referred to as debt to credit ratio.
This...
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Credit Card Utilization Affects Credit Score
There are many things that you can do to improve your credit score and get a quick
boost in score.
One of these things involves your credit card utilization, otherwise
referred to as debt to credit ratio.
This number is the total credit card debt in
relation to the total amount of credit available across all of your cards.
Here is a very
simple example: if you have 5 credit cards each with a $1,000 credit limit and a $500
balance on each card you would have $2,500 of debt and $5,000 total credit
available.
This would result in a 50% utilization rate, or debt to credit ratio.
The
lower this percentage, the higher your credit score will be.
If you are going to be
shopping around for competitive interest rates for a new car purchase or a mortgage
loan, then you will want to pay down your balances to maximize your FICO score
before applying.
This is a very simple way to raise your score and you will see the
impact on the next reporting cy
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