Money does not grow on trees, a common question is if you should pay off your credit card debt with your Christmas bonus, or just make an extra payment or two. People believe that it is always better to have a balance on their credit cards. So that would mean, that we should pay our credit card slowly, Shouldn’t we?

To answer this question, it would be “no” in most cases. Paying off your credit cards will help reduce the interest that you pay to the credit card companies, saving you a ton of money. It will also help keep your credit in good standings with the creditors.

So, what do credit card companies look at to decide if you are credit worthy or not. First, they look at the credit scores. There are 3 credit reports that creditors use when determining your credit worthiness. They look at your Experian credit report, Equifax credit report, and your TransUnion credit report. Each of these reports give credit scores that the creditor will look at when deciding if they will be able to provide you with credit or not, and each report can have a different score.

You may be wondering how the 3 agencies calculate your credit score. For credit agencies to calculate the score, they look at the information provided on the reports. 35 % of your score is calculated by your Payment history. 30 % of the score is decided by the amount you owe. 15% is determined by the length of your credit history. 10 % is the amount of new credit you have incurred, and 10 % is calculated by the types of credit used.

When looking at your credit history, creditors are looking for specific things. They are looking to see if you pay on time, or if you have any overdue payments. Overdue payments will reflect on your reports as being 30, 60, 90, or 120 days past due. It will also show if an account is in collections or has been charged off.

Examining the amount that you owe, creditors are evaluating the amount of debit you have. They want to see if you have high debit ratio, meaning the amount of credit you have used compared to the total amount of credit you have available to use.

Length of credit history is important as well, having a solid credit history shows creditor you know how to manage your credit wisely. It would be best for your credit cards history to be at least 1 year old, if not longer. And they also want to see any new lines of credit you may have.

Last creditors look at the type of credit you have. Typical it is best to have 3 to 4 revolving credit accounts. 1 to 2 installment credits accounts and 1 to 2 open credit accounts.

Having good credit, is the key to your family’s success. If you have a good credit score, you will be able to support them, when those unexpected things happen.


A Goal without a Plan is just a Wish. Give us a call TODAY at 844-FIX-URCR or click on the following link to schedule your FREE consultation and create your personalize plan to achieve your credit and debt GOALS!

*Individual results may vary. Please call for more details and to discuss your own individual situation.