Debt to Credit Limit Ratio
If you are using over 30% of your total credit limits, then your credit score will drop. This, in turn, could cause you to be denied for certain loan opportunities.
High debt balances can use up most of your available credit. Once your balances approach your credit limits, your score plummets. If you max out your cards or go over-the-limit, it can really drop your credit score.
Such a high credit utilization rate can make your lenders nervous because it indicates a high risk of default. This can reduce available credit offers as well as trigger universal default among your current credit card issuers.
Credit Score Ignores Income
Some debtors assume that higher debt balances do not affect them the same way because they have a higher income than other debtors. This is not so.
Your credit score ignores any income reported by your lenders. It simply is not factored into your score. Lenders may use your income to determine credit limits, but this is generally the only way it can influence your credit score.
Managing High Debt Balances
Many debtors try balance transfers to shift balances around and reduce finance charges. This can work in some cases, but as debt balances reach higher, these offers can dry up.
The best way to manage high debt balances is to stop making charges on the accounts and receive lower interest rates on the accounts. You can receive lower rates if you earn them through higher payments. You can also earn lower interest rates by committing to a debt management plan.
You can consolidate your payments while gaining the benefit of lower interest rates. If you have been battling high debt balances and cannot gain on the principal due to the interest, consider getting credit card debt help now.