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How credit card debt can impact a credit score

Many life events can cause Tennessee residents to fall behind on their credit card payments. The holidays can be a time of overindulgence and high bills for some. Others may run up large bills, while on vacation. Many people find themselves in over their heads with credit card debt when emergencies, such as accidents, cause them to quickly buy new cars or pay off medical bills.

Regardless of why a person's credit card debt becomes out of control, debt can create big problems for the consumer, if it is not properly managed. One way that debt can affect a person's financial health is through its impact on the individual's credit score. A credit score is generally a scaled number that represents how reliable a person appears to be with regard to obtaining more credit.

A high percentage of Americans do not know their credit scores, and some only find them out when they are denied car loans, mortgages and credit cards. Lenders are hesitant to extend credit to individuals who appear to struggle with debt. One of the primary ways they make that determination is through a review of the person's credit score.

There is good news, however. There are some common sense ways a person can begin to rebuild his credit score, and obtain the credit he needs to move his life forward.

Individuals with struggling credit scores may need to analyze why their scores are so low. Their scores could be affected by high credit to debt ratios or late payments on credit accounts and credit cards. Having many open credit accounts can also lower a credit score, if those accounts are not properly managed.

Making more than the minimum payments on credit cards can help reduce a person's credit card debt and help rebuild his overall credit score. When credit cards are paid off individuals can avoid the costly interest payments many credit accounts apply when payments are not made in full. Though rebuilding one's credit score can take time, it is an important step to preserving a person's financial health for the future.

Source: Times Union, "No quick fix to boost a credit score," Susan Tompor, May 17, 2014

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
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