Credit Scores and Debt

Statistics from a recent nationwide study by Experian Consumer Direct show that many consumers may not understand the relationship between credit card debt and their credit scores.  The trend shows that consumers have in addition to increasing their debt over the last two years, the number of late payments has also increased dramatically, almost 20 percent.

What is startling about these new findings is what this implies of the average consumers knowledge of how their credit score is figured.  Debt can have a serious impact on a credit score, though this is not to say some credit card debt is going to drastically change your credit score.

Some areas to consider that can negatively impact a credit score:

• Opening/Applying for many credit cards

• Carrying high credit card balances close to the credit limit

• High debt levels with late payments

Knowledge is the key to understanding how to manage debt effectively, and equally important in debt management is being aware of how to keep your credit score high. ■