the ratio between the credit card balances and their limit
MIAMI (PRWEB) February 19, 2018
Credit utilization ratio is an important factor in computing for credit scores and National Debt Relief explains it in more detail. The article titled “Understanding Your Credit Utilization Rate and How to Improve It” released February 14, 2018, helps consumers gain a better understanding of what credit utilization ratio is and how they can manage it to improve their credit score.
The article starts off by explaining that the credit utilization ratio is the ratio between the credit card balances and their limit. It basically measures the available credit at any given time and how much of it a person is using. The lower the percentage, the better it is for their score. This also helps lenders identify lending risk. The article shares that this is one of the easiest factors to improve on which can positively affect their credit score.
One of the tips that the article share is paying above what their minimum payment is. This helps lower the total debt amount. As the balance goes down, it also lowers the usage rate and sends a good signal to lenders. As it lowers down a person’s credit utilization ratio, it also helps consumers pay-off their card debt a lot faster.
One other tip the article gives to consumers is to learn how to diversify their expenses. This works for consumers who have more than one credit card because it entails distributing expenses throughout the credit cards. As the amount is distributed, the credit utilization ratio is lower because no one card carries all the debt. Consumers also need to remember that having three cards with low utilization rates is better than having one card with a high one.
The article also shares that consumers can choose to get alerts through their credit card company. Once their balance nears a specified dollar figure, they will know about it allowing them to maintain a low credit utilization ratio. They can also request for an increase in their credit limit but this should be the last option. This is because consumers could be tempted to spend more and be back in the same situation.
To read the full article, click https://www.nationaldebtrelief.com/credit-card-utilization-rate/