Further research is needed to nail down the answer. How do we explain the relatively low average credit for the 0% CUR? We guess that some of these cardholders simply don’t use their credit cards much and therefore have little opportunity to improve their credit scores. The following chart from Credit Karma shows the relationship between CUR and credit score: John is in much better shape, credit-wise, than Mary, who needs to reduce her balances by at least $1,200 just to reach the critical 30% CUR target. If John’s credit lines add up to $20,000 while Mary’s total $6,000, some simple math puts their CURs at 25% and 50% respectively. You can improve your score even faster if you can get your CUR below 10%, but any credit card balance above 30% will likely reduce your credit score.įor example, the fact that John owes $5,000 on his credit cards while Mary owes $3,000 does not necessarily make John a greater credit risk. Rather, creditors contextualize that total by comparing it to the sum of all your credit card credit limits.Ĭreditors generally want to see CURs below 30%. The importance of the CUR is that you can’t judge creditworthiness simply by the total of your credit card balances.
One of the most important metrics for judging the impact of your credit card debt is the credit utilization ratio - or credit utilization rate (CUR) - which is the amount of credit used versus the credit line authorized, i.e., your credit card balance versus your credit limit. If you can get a credit bureau to correct or remove inaccurate derogatory information, you should see an improvement to your credit score within a month or two. By law, the bureaus have a month to adjudicate each dispute. Each bureau accepts disputes via online facilities, or you can communicate through registered mail or over the phone.ĭIY credit repair is essentially cost-free but can be very time-consuming. You can correct misinformation by challenging your creditors to validate the information and by lodging disputes with the bureaus. Purging mistakes from your credit file can help an incorrectly depressed credit score rebound.
Naturally, your score can suffer if your credit file contains inaccurate information, such as: The bureaus use these reports to assign you a credit score. One of the major jobs of the three major credit bureaus (Equifax, Experian, TransUnion) is to compile monthly credit reports that include data about your debt repayments.