This is a subject that comes up alot…and there alot of misconceptions…so as always, we are here to set the record straight…
Firstly, Debt Utilization is the calculation in the form of a percentage that considers what portion of your available credit is in use…this calculation accounts for 30% of your credit score…
So, for example if you have a credit card with a limit of $1000 and you currently have $900 in use, then the debt utilization for that credit card is 90%…which is high, and will affect your credit score negatively…the way you can ensure that your credit score is healthiest, is by making an effort to keep your debt utilization as low as possible…
The main question that comes up regarding debt utilization is weather it considers each credit card individually, or the total of all your accounts. The truth is, that BOTH are considered. When debt utilization is considered, the cards are looked at and calculated individually, AND the total debt utilization of all available credit is calculated…
We know it can be difficult in these somewhat difficult economic times, but do your absolute best to not carry large balances on you credit cards…your credit score will be healthier as a result…
Happy New Year…!!
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