improving your credit score | memphis bankruptcy attorneysUnderstanding credit-to-debt ratio can really help you

By: Darrell Castle 

Many of us are concerned with our credit and maintaining a good score, which is good – you should be. But, often times, people make things more difficult on themselves when trying to figure out how to improve their credit score.


Here, I’d like to touch on one simple aspect – your debt-to-credit ratio.

Your debt-to-credit ratio is how much you owe verses your total available credit. This makes up a good chunk of your credit score – 30% to be exact.

This is why carrying high credit card balances is something you don’t want to do. But you shouldn’t look at this information in a negative way, but spin it into a positive.

Revolving debt, like credit cards, weighs heavier in determining your credit score than other outstanding debts, like your mortgage or car loan.

Knowing this and knowing how important your debt-to-credit ratio is, you can be more mindful in how much credit you use in an attempt to improve your credit score. Just because you have a $2,000 credit limit doesn’t mean you should max it out – this tells the banks you aren’t responsible.

Why is having a good credit score so important? Because with good credit, you can live life more affordably and efficiently.

With bad credit comes higher interest rates and higher deposits on utilities and other things. You also risk not being approved for a mortgage or car loan.

However, with a good credit score, you shouldn’t have any problems being accepted for a mortgage or loan, and you’ll most likely receive more favorable interest rates, resulting in more efficient spending of your dollars.

You may currently be struggling with credit card debt and have no idea how to get out of the hole. If so, you should consider filing for bankruptcy.

By filing for bankruptcy, your debts can be discharged through a Chapter 7, or lumped into an affordable 3-5 year repayment plan through a Chapter 13. Once the bankruptcy process has completed, you have a clean slate and a fresh start to spend your money the right way, like maintaining a responsible debt-to-credit ratio.

At Darrell Castle & Associates, our experienced Memphis bankruptcy attorneys not only want to help you get of debt through the bankruptcy process, but we also want to see you succeed after. We do this by offering you access to a great 14-week program called “7 Steps to a 720,” which teaches you tips and secrets the banks don’t want you to know in regards to re-establishing and rebuilding your credit the right way. This program, which costs $1,000, is free for our clients as we pay it for you.

If you have any questions or if you’re considering filing for bankruptcy, you can speak to one of our attorneys today, free of charge, by filling out the “Get in Touch” form at the bottom of the page, or by calling us at (901) 327-2100.