By: J. Paxton, MBA, PhD
Does high balance, high interest credit card debt hurt my credit score? Why?
Yes, high balance, high interest credit card debt can and does hurt your credit score. Your credit score is a numerical representation of your creditworthiness and is based on several factors, including your credit utilization ratio, payment history, and the length of your credit history. So if you are wondering why your credit score isn’t increasing, this could be the reason. Check out this Experian article about common reasons why credit scores don’t rise.
High credit card debt can impact your credit utilization ratio, which is the amount of credit you are using compared to the amount of credit available to you. A high credit utilization ratio indicates that you are using a large portion of your available credit and can be seen as a sign of financial strain by lenders. This can lower your credit score.
Additionally, late or missed payments on your credit card can also have a negative impact on your credit score. When you have high balance, high interest credit card debt, it can be difficult to make the minimum payments on time, which can lead to late or missed payments.
Finally, having a large amount of high-interest debt can also signal to lenders that you are a high-risk borrower and make it more difficult to obtain credit or loans in the future. This can further impact your credit score and financial stability.
Some solutions that people can pursue to alleviate these issues are: (1)increasing the amount of money they send to credit card companies every month, (2)stop new spending, (3)consider debt settlement, (4)consider bankruptcy, (5)increase income)
In summary, high balance, high interest credit card debt can hurt your credit score by affecting your credit utilization ratio, payment history, and perceived creditworthiness by lenders. It’s important to keep your credit card balances low and make payments on time to maintain a healthy credit score.
Media Contact:
Carlo V. DeFalco
Carlo@berelentless.com
RELENTLESS Venture Studio
