How credit card balances influence credit scores

Among U.S. households with credit card debt, the average balance is roughly $16,000. In addition to the high interest rates, large credit card balances could harm a Florida resident’s credit score. The amount of credit that a person uses makes up 30 percent of his or her credit score. A person’s ability to pay on time is the only factor that is more important than credit utilization when it comes to calculating a credit score.

Ideally, an individual wants to use no more than 30 percent of an available credit card balance. This is generally true regardless of whether a person has $500, $5,000 or $50,000 in available credit. Therefore, those who have lower credit limits may have lower credit scores even if they are using less credit than others. Regardless of how much credit debt a person has, the best policy is generally to pay it all off as soon as possible.

This is often true regardless of the impact that it may have on a person’s credit score. By paying down a balance, a person will pay less in interest, which may make it easier to handle monthly debt payments. Debtors should also consider that the length of their credit history as well as their credit mix may also play a role in determining their scores.

Filing for bankruptcy may make it possible to reorganize debt over a period of several years or have it discharged entirely. In some cases, it is possible to discharge debt without losing a home, car or other major assets. Creditors are generally unable to make phone calls or otherwise contact a debtor while a bankruptcy case is ongoing. This can make it easier to deal with credit card debt.