The Reasons Not to Pay Down Your Credit Card Debt

The Reasons Not to Pay Down Your Credit Card Debt

Improve your credit score by avoiding these mistakes.

As counterintuitive as it may sound, paying your credit card debt in one fell swoop may not be the best thing for your credit score. Sure, it may get rid of the debt shadow that’s been following you around everywhere, and while, financially, it will help you break free, in the eyes of credit companies this is not good. How, then, are you supposed to pay off your debt in ways that won’t drain you financially, and isn’t seen as something negative in the eyes of credit card companies? You’ve come to the right place, here are some great tips to pay off your debt while boosting your credit score.

Zero balance doesn’t guarantee a credit lift.

If you’re trying to improve your credit score, seeing $0 next to “amount owed,” isn’t going to help you very much. This is because 30 percent of your credit score is determined by Credit Utilization Ratio, or the amount of credit you are currently using divided by the amount that’s available to you. 30 percent credit usage will make your credit score suffer, while 10 percent usage will give your score a real boost.

Money is better spent elsewhere.

You may think that getting rid of your credit card debt as soon as humanly possible is a good strategy, but it may not work as well as you’d expect. Having more money in your bank account is attractive to lenders. You have more leverage when it comes to taking out a necessary loan, and don’t have to settle for your 3rd or 4th option. Having money in your savings could also save you in case things don’t work out with your landlord or if a disaster strikes.

Want more information on how paying off your credit card debt as quickly as possible may be bad for your credit score? Contact Avis Lending in Irvine, California and Lahaina, Hawaii for all of your home loan needs!


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