It is unfortunately all too common for consumers to carry balances on their credit cards. This may be acceptable if you are on a low or no-interest promotional interest rate. But if your credit card interest rate is in the high teens, carrying a balance can cost you dearly. Not only will you pay much more for the privilege of making your purchase on credit, carrying a balance can also lower your FICO score significantly depending on how you pay down the debt each month. The following article does a great job of breaking down different scenarios of carrying balances on your credit cards and how that affects your credit score.

How credit card debt affects your credit score

http://finance.yahoo.com/news/too-much-credit-card-debt-103047069.html

Most people don’t realize that even though they are paying off their balances by the due date, they still may have a lower score. The balance you have on the date your monthly statement is generated is the amount that is reported to the credit bureaus. So even if you pay it off by the due date, in the eyes of the bureaus and FICO you are still utilizing available credit.

Here’s a little tip that this article left out. Figure out the date your statement is generated and plan on paying down or paying off your balance BEFORE that date. When your statement generates, the lower or zero balance will be reported to the credit bureaus. This will lower your appeared credit utilization, which will in turn increase your FICO score. There are lots of tips and tricks to increase your credit score. But a life free of debt should be your goal. If you feel overwhelmed by your debt, lose sleep at night or otherwise feel like your debt is out of control I would encourage you to contact our debt settlement law firm to see what debt relief options are available to you to help you resolve your debt issues.