Credit card maxed out?

We understand that it is frustrating when you max out your credit card.

You are not alone in this, the majority of Americans have maxed out their credit cards at least once.

Well, we need to avoid doing this! It is bad for our credit and will make it more difficult to repay our debts in the future.

To maintain a good credit score, aim to keep the utilization of your revolving credit lines, like your credit cards, under 30% of your available credit.

What does this mean? 

Credit utilization rate is the ratio between how much revolving credit — that is, accounts with balances that vary from month to month, like credit cards — you’re currently using and how much is available to you.

You can calculate it on a single card by dividing your current balance by your credit limit and multiplying it by 100. So if you have a $10,000 limit and a $2,000 balance, your credit utilization ratio would be 20%.

Why is this important?

Keeping your utilization ratio below 30% will suggest to creditors that you can use credit responsibly without relying too heavily on it.

-Kenney Conwell