Credit/Debt Counseling - What you want to know.

     Your credit is affected both positively and negatively by various aspects related to your finances. Among these, the debt to credit ratio is quite a complex thing and it is tricky to maintain the ratio in order to maintain a good credit score. If you are having problems in understanding and maintaining the ratio, you can go to a credit and debt help or counseling company who can help you with understanding the debt to credit ratio.

Debt to credit ratio – What is it?

     Debt to credit ratio also known as the credit utilization ratio represents the amount you owe in relation to your total available credit. Your credit utilization percentage has an effect on your credit score. Generally, if the percentage goes over 60% it hurts your score negatively. So, you should always try to maintain a low credit utilization percentage so that your credit score is not hurt.

     In order to maintain a low credit utilization percentage, you must always try to pay down your debts as fast as you can and as much as you can. It is always important to maintain a low balance on your credit cards in relation to the available credit limit on each of them. For example, if you have five credit cards with a credit limit of say $10,000 on each of the cards you should maintain a balance below 30% of the credit limit on each of the cards. Also, the total credit limit available to you is $50,000. So, if you owe $40,000 in total then your credit utilization is 80% in total. This is much higher than the 30% and will hurt your credit score. So, you will have to try and bring down the credit utilization ratio so that it does not affect your credit score negatively. According to financial experts you should be able to maintain atleast 40-60% credit utilization.

     If you have high amounts of debt you will have to try and pay those off in order to bring down your debt to credit ratio. If you think that you are having problems in paying down your debts, you can take debt help from debt relief companies. They will help you in managing your bills and paying them off.

However, before going to take help from ant debt help company, you should try to find out if the company is a reliable one or else you may get scammed. In that case your debt problems may increase all the more.

Disclaimer: This site is not , nor should it be taken to be, legal, financial or other professional advice. It merely provides a generalized guidance and generalized information only. Consult a financial advisor or an attorney to discuss any legal or financial issues involved with credit and debt decisions.