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How to keep a good credit score with outstanding debt

Many people in South Carolina have credit card debt that they can't afford to pay off in full each month. However, outstanding credit card debt does not necessarily have a negative impact on every person's credit score. As long as credit card debt is managed properly, a person can maintain a relatively good FICO score.

One of the biggest mistakes that people make with credit cards is failing to make the minimum payments on time every single month. Though making minimum payments may not do very much to chip away at debt, it does a lot to keep a credit score from falling. Missed payments can be very damaging, as FICO designates 35 percent of each person's credit score to their payment history.

Another important thing to remember about credit scores is that they are largely based on credit utilization ratios. FICO looks at a person's available credit limit from all sources of credit and then looks at what portion of that credit limit has already been used up. The more unused credit people have available, the better their credit score will be. Even if people are unable to pay off all of their credit card obligations, they could work towards achieving a lower revolving utilization ratio.

Difficult circumstances in life sometimes result in people using a lot more credit than they can afford to pay off. A person who has an overwhelming amount of credit card debt and several delinquent payments may want to talk to a lawyer about the effect that filing for bankruptcy may have on the outstanding balances.

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The Huggins Law Firm, PA

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1812 Lincoln Street
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Columbia, SC 29201

Phone: 803-764-1558
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