Consumers often have a few options when it comes to increasing their credit score and some are looking to raise their score by a few points when a credit check may be on the horizon or a consumer may be looking for financing opportunities, but there are also those who have a very poor credit scores and are in need of ways to either erase bad credit debt and begin the process of repairing their credit score or these consumers may be looking for a line of credit which will allow them to begin building a better credit history.
Yet, one way that consumers have to increase their score is simply by lowering their credit utilization ratio. A recent article on Bankrate.com made mention of this practice as there are some consumers who have a lower credit score at the present time due to the fact that their credit utilization ratio is high, meaning the amount of debt they have compared to their overall credit limit on revolving lines of credit is higher.
Typically, credit cards are one of the main sources where a high amount of debt is present and, when compared to the overall lines of credit that are open to consumers, this can lower one’s credit score, although it may not be a substantial drop. Consumers who may have various credit cards obviously have a high amount of overall credit, but when most of these cards may be close to being maxed out, the amount of debt related to their overall credit limit usually is seen in a somewhat negative light.
However, when it comes to simply increasing a credit score, erasing debts is one of the more common and basic practices that consumers implement as having outstanding debts can be helpful in some ways, but having a large amount of debt in relation to one’s credit limit can not only cause a consumer’s credit score to drop, but this could be problematic in an individual’s financial life as well. Obviously, when a high amount of credit card debt is present and consumers simply make minimum monthly payments or continue to rely on their credit cards, these debts can get out of control and become overwhelming which could lead to miss payments or even defaulting on certain types of credit obligations.
For consumers who are looking to increase their credit score, it is true that paying off debt so that a lower credit utilization ratio is present can be helpful, but in the larger spectrum of things, erasing debts on various credit cards or other debt sources can put consumers in a more favorable position to not only increase their credit score at the present time but keep a more positive credit history down the road. Obviously, simply erasing credit card debt does not always put a consumer in a position concerning their credit score where they may be happy, but lowering one’s overall debt is typically the first step for common consumers who are looking to begin the process of increasing their credit score.