Phone Call Us 414-326-9231
Toll Free 866-678-9352
Text Us 414-277-7742

How debt to credit limit ratios impact credit ratings

Wisconsin residents who seek to improve their credit rating often focus on making sure they send in payments on time, but many do not realize that keeping their balances low is also important. Many people assume that as long as they are making on-time payments, they can rack up as much credit card debt as their balances will allow. However, keeping large balances on credit cards may prevent someone's credit score from improving or even lower it.

Some people believe that maintaining a high balance on their credit card will have no impact on their credit score and lead to an increase in their available credit line. Doing so may lead to increasing someone's available credit, but it is just as likely to end up reducing their available credit. Additionally, keeping balances at or near a card's limit can raise someone's debt to credit limit ratio, which is a number that should be kept low if at all possible.

A debt to credit limit ratio is the amount of debt people have compared to the total amount of credit available to them. It is recommended that people keep their ratio at or below 30 percent, and those with the best FICO scores have an average of seven percent. If someone has a solid payment history but is not seeing an improvement on their credit rating, it may be due to a high debt to credit limit ratio.

Managing debt is an important part of maintaining a good credit score, but if people's debt is beyond their ability to repay, filing for bankruptcy could help them regain control of their finances. A lawyer could explain how bankruptcy might be able to help a client and assist them with filing.

Source: Main Street, "analyze your debt to credit limit ratio", Deepa Venkatraghvan, July 15, 2013

No Comments

Leave a comment
Comment Information

Contact Our Milwaukee Law Firm

Reach Miller & Miller Law, LLC, online or call us at 414-326-9231 to schedule a free initial consultation. Our law office also provides Spanish language services. Se habla español.

To schedule an initial consultation, call 414-326-9231 or contact Miller & Miller today.

Free Case Evaluation

* indicates required field

Milwaukee Office
633 W Wisconsin Ave, Suite 500
Milwaukee, WI 53203

Phone: 414-312-6581
Fax: 414-277-1303
Milwaukee Law Office Map

Kenosha Office
6123 Green Bay Road
Suite 210
Kenosha, WI 53142

Phone: 262-326-1669
Kenosha Law Office Map

Brookfield Office
200 S. Executive Drive
Suite 101
Brookfield, WI 53005

Phone: 262-261-0665
Brookfield Law Office Map

Madison Office
2810 Crossroads Drive
Suite 4001
Madison, WI 53718

Phone: 608-260-7133
Madison Law Office Map

Glendale Office
6001 N. Green Bay Avenue
Glendale, WI 53209

Phone: 414-973-8662
Glendale Law Office Map

Appleton Office
4321 W. College Ave.
Suite 200
Appleton, WI 54914

Phone: 920-280-3838
Map & Directions