Law Office of Judith A. Descalso Law Office of Judith A. Descalso

The holidays, credit card debt and your credit score

The holiday season brings family and friends together for parties and gift giving, but, unfortunately for millions of Americans, the aftermath of the season also brings big credit card bills. Generosity can come back and cause problems in the New Year.

However, there are many different ways that an Escondido resident can limit the negative implications of credit card debt, and while doing so they can keep their credit score in a good place. For starters, it is important to understand the interplay between credit card debt and a person's credit score - a score which is used by financial institutions to determine a person's credit worthiness, usually when it comes to giving a loan.

When an Escondido resident has credit card debt that is approaching the credit limit of multiple credit cards, that will almost always cause a credit score to be lowered. This is known as the debt-to-limit ratio. But, if a person has multiple credit card accounts with high limits, and some of them aren't being used, this can balance out the impact that a temporarily high amount of debt on one card can have.

Perhaps the most important part of keeping a good credit score, even when dealing with large amounts of credit card debt, is to make all monthly payments on time. Creditors view the timeliness of payments almost above all other factors, so making the monthly payment - even if it is only the minimum payment - can go a long way toward securing and keeping a good credit score. This will be important for many Escondido residents as the calendar turns over into the New Year, when those monthly minimum payments are likely to be higher.

Source: The Huffington Post, "5 Tips for Managing Credit and Boosting Your Score," Andrew Plepler, Dec. 22, 2014

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