Increasing A Bad Credit Score And Improving A Credit Utilization Ratio–How Are Consumers Controlling Personal Debt?

Increasing a bad credit score or simply building a better credit history can be accomplished through various means, but improving a credit utilization ratio can also be beneficial for consumers who may be able to control personal debt and pay down debt obligations on the road towards finding a more positive credit score. Obviously, consumers who are in different positions in their financial walk will need to implement different credit rebuilding habits, but when it comes to the amount of debt a consumer has compared to the available amount of credit in their personal life, it can can have effects on the consumer’s score.

Consumers who have a great deal of debt compared to the amount of credit available in their life may see a decrease in their credit score, but when it comes to building a more positive credit history in the hopes of increasing one’s score, a credit utilization ratio is not the only factor that needs to be considered, but it does lead to an issue that may be an underlying cause of a consumer’s financial difficulties. Again, a high credit utilization ratio simply means that a consumer has a large amount of debt compared to the overall amount of credit they may have available, which could point to the fact that a consumer may have trouble repaying debts or could simply be living outside of their financial means.

Obviously, when it comes to increasing a bad credit score, paying off debts will be vital before a consumer can begin implementing strategic practices to keep their credit in a positive position, and lowering one’s credit utilization ratio can also be beneficial for improving a bad credit score. Yet, an article on makes a point of mentioning that, “…your credit score is calculated using literally hundreds of variables. While credit utilization is an important factor…it still is just one variable among many.” Essentially, a consumer’s credit utilization ratio will not ultimately determine their credit score, nor will it be able to increase a bad credit score, as a consumer’s credit history, the amount of time a consumer has had particular lines of credit, and also the percentage of a consumer’s debt compared to the available credit will factor into their score.

Consumers who are attempting to pay down debts will, obviously, lower their credit utilization ratio but many make the mistake of closing credit card accounts, as one example, which can, again, lower the amount of available credit they have in terms of the amount of debt in their life. Some consumers have kept credit card accounts open even after paying them off and only use them a few times during the year to make affordable purchases that are promptly paid off. This, again, will not only keep a consumer’s debt to credit ratio in good standing, it can also continually build history on a particular card that will reflect positively when certain factors are considered related to a consumer’s credit score.

While maintaining positive spending and repayment habits are the primary method which consumers use to increase their poor credit score,  it must be kept in mind that a high credit utilization ratio simply means that a great deal of debt is present in the life of the consumer and this is detrimental to bad credit repair, as erasing debts should be anyone’s primary focus when they are in a position to increase a low score and build a more positive credit history. This utilization ratio alone will not be the determining factor in rebuilding a credit score, but it is one area that a consumer must analyze and consider when they are attempting to find a more stable financial ground and a positive credit score.