Credit Advice

Reducing high credit card balances should help increase your credit scores because it shows you have better control of your debt and that you aren’t buying beyond your income. Low balances mean lower payments. That reduces the likelihood that you will miss payments or get into trouble. Low balances as compared to your credit limits also results in a low debt-to-limit ratio, which I have discussed in previous columns. A low debt-to-limit ratio is an indicator of low lending risk, which will be reflected positively in credit scores. When you can pay in full each month, you also eliminate those expensive interest costs, enhancing your financial well-being. The other important fact about reducing your balances is that you will almost certainly improve your physical well-being, too. As your balances go down, so does the pressure to meet the payment requirements, which results in reduced stress and even better physical health. Participating in a quality credit counseling program is a very good step to take. During the program you should learn how to better manage your debt, establish and live within a budget, and take control of your finances. In the long term, your credit history will improve and you will be a much happier, healthier individual.