Credit card debt is among the most insidious and tenacious forms of debt facing American citizens today. In Connecticut and elsewhere, many families and individuals are on the lookout for debt relief due to a high-interest balance on one or more credit cards. Of course, such balances can negatively affect credit scores, which in turn influence an individual or family’s ability to secure additional loans, mortgages and other financial assets crucial to long-term stability. Thankfully, there are a variety of ways to improve a credit score, even after a Chapter 7 bankruptcy filing.
Some 35 percent of credit scores are based on the consumer’s ability to pay his or her bills on time. Bill history is measured by the ability to pay down credit, as well as the frequency with which an individual does so. Late notifications, insufficient funds fees and other indicators of a failure to pay on time can negatively affect a credit score. Paying bills in full, especially in advance, can help to repair a score affected by previous late payments.
Creditors identify borrower risk based upon how much of one’s available credit is being used at any given time. Ideally, a borrower is using no more than 30 percent of the available credit at a time, with 50 percent being the maximum allowable before a credit score is adversely affected. Keeping as close to 30 percent as possible can have a very positive affect on a credit score.
Of course, for some Connecticut residents, credit debt has spiraled out of control to the point where improving a credit score is the least of their concerns. For those seeking serious debt relief, Chapter 7 bankruptcy could be a positive option. This form of filing can wipe out existing credit debt, allowing the borrower to rebuild credit from the ground up.