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The major credit agencies all evaluate a person's credit in roughly the same fashion. The problem is, most people are not aware of how any of them do it. If you want to know how things such as credit card debt can affect your credit report, here is a quick breakdown of that aspect, specifically.
First, credit card debt is not necessarily a bad thing on your credit report. The real question to the credit bureaus is how much credit card debt do you have compared to your available credit. Let's say you have 3 credit cards with a total of $10,000 in credit lines. Let's also figure that those three cards carry a total of $5,000 in credit card debt. You would be better off in this scenario than if you had 3 cards with a total of only $5,000 in credit lines and were maxed out at the whole $5,000.
Having available credit from your credit lines, even in the face of credit card debt, will help you keep from having your score hurt too badly. The key to keeping your credit card debt from hurting your credit report is to either pay it off, or never max your lines out.
|Jennifer Mathes, Ph.D.|