There are a number of aspects that can negatively affect your credit score, including being late on repayments, having too many enquiries in a short period of time, and carrying too much credit card debt. Although most know that missing payments and increasing credit card debts are harmful to one’s credit file, a greater impact is most likely to happen from having high credit card debts for an extended period of time. This critical factor that directly affects your credit score is too often overlooked and can be costly. It can make getting additional credit a challenge which then escalates the interest charged on unpaid balances.
According to the Australian Securities and Investment Commission, individuals owe an estimated $33 billion in credit card debt, which averages out to near $4,200 per person. It is clear that most people are carrying over debt balances each month and still may not understand just how damaging this can be to their credit score.
When your credit card balance is high or are continuously near the limit, lenders quickly categorize these users as a high risk candidate due to their total credit limits. Lenders can also view how long each balance has been carried over from month to month. This can also drastically reduce your credit score – it is generally assumed that you are using your credit in an irresponsible way when balances are not repaid in full each month.
In order to control of your credit score, you should be careful not to accumulate credit card debt more than what you are able to repay each month. Alternatively, you could spread your credit card usage over multiple cards, keeping the balance low on each account so that you don’t overspend your credit limit on one particular card. However, if you are having difficulty keeping up with your current credit card debt repayments or have had less than perfect credit in the past, it may be worth considering a credit repair program.
Credit repair can assist borrowers who have had negative listings on their credit files due to overdue or non-payment of debts, a high number of credit enquiries, or high credit card debt balances. It is possible to repair your credit file with the help of a professional service such as Clean Credit who may be able to help you pave the way for easier and less costly financial assistance you may need in the future.