Admit to your Weight or your Credit Card Balance?
Admit to your Weight or your Credit Card Balance? Americans would rather tell you how much they weigh, how old they are or how much money they have in the bank than admit how much they owe on their credit cards. This is according to an online poll from the National Foundation for Credit Counseling?.
The respondents said they’d be most embarrassed to admit their…
Credit card debt = 37 percent
Credit Score = 30 percent
Weight =12 percent
Bank balance =10 percent
None of the above = 9 percent
Age = 1 percent
“Since consumers revealed that the two facts they’d be most embarrassed to admit are related to credit, it is obvious that they are not comfortable with how they are currently managing their money,” said Gail Cunningham, representative for the NFCC.
The two most embarrassing things are related. Your credit card debt influences your credit scores. Typically one of the highest weighted elements of a credit scoring model is how much you versus your total available line of credit.
Although credit scoring companies and lenders each set criteria for evaluating credit worthiness, it’s wise not to use more than 30 percent of your available credit. Would you prefer to Admit to your Weight or your Credit Card Balance?
Let’s say you have $4,000 in credit card bills.
If the $4,000 is on one credit card with a $10,000 limit, you’ve used 40 percent of your available credit ($4,000 of the $10,000 you have available).
If you have $2,000 on one credit card with a $10,000 limit and $2,000 on another credit card with a $10,000 limit, you’ve only used 20 percent of your available credit ($4,000 of the total $20,000 you have available).
So having $2,000 on the two cards with a total $20,000 limit is better than having $4,000 on the one card with a $10,000 limit.
Having the best possible credit helps you get the best possible deal on a mortgage. If you’re planning to refinance your home loan or buy a new home, contact me and I’ll refer you to a loan officer who can work with you to make sure your credit is up-to-date so you get the interest rate you deserve.