Credit Card Debt Falls in 2011, so Do Credit Scores Consumer credit card debt fell in every single U.S.

Credit card debt is on the decline Credit Card Debt Falls in so Do Credit Scores 2023:

state year-to-date through November, according to the latest data released by CreditKarma.com, a provider of free credit scores.

Mortgage and home debt have also decreased since January, with car loans the only category to see an increase.

 

U.S. The Credit Score Climate Report also tells us that even as Americans continue to reduce their credit card balances, their credit scores are also falling. Amazingly, the state whose residents reduced the largest portion of total credit card debt in 2011 also leads the nation in the unenviable category of lowest average consumer credit score. Let’s take a closer look at the data.

US consumer credit card debt fell 10% in 2023.

 

, so Do Credit ScoresCredit Karma tells us that in November, Americans with at least one account owed an average of $6,503 to credit card companies. That’s down 1.47 percent from October’s average of $6,600 and down 10 percent from January, we learned Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in 2011 so Do Credit Scores.

In 2011, consumer credit card debt declined in every single state, with the fastest declines in these states:

Mississippi – down 16 percent to $5,362.
Alabama – down 14 percent to $5,750.
Kentucky, New Hampshire, Rhode Island and West Virginia – down 13 percent to $6,151, $7,464, $6,090 and $5,956, respectively Credit Card Debt Falls in 2011 so Do Credit Scores.

The formula is likely to change in December, says Ken Lin, CEO of CreditKarma.com:

While it’s a good sign that credit card debt is down year-to-date, that trend is unlikely to continue as the holiday season continues and more consumers put their purchases on their credit cards.

Changes since January in the categories of non-revolving debt were reported as follows:

Home mortgage debt fell three percent to $175,070.
Home equity also fell by three percent to $47,911.
Car loans rose four percent to $15,370.

Credit Karma did not release student loan data.

The average credit score decreased by 5 points

Credit Card Debt Drops in 2011, So Credit Scores Since we saw a double-digit decline in credit card debt in 2011, and only the smallest non-revolving categories saw an increase, we should expect the average credit score to improve , No? Well, not according to Credit Karma Credit Card Debt Falls in 2011 so Do Credit Scores.

Although November’s credit score – 661 – was unchanged from the previous month, it was down five points on the year. How did it happen?As we’ve already explained, a consumer credit score is made up of five main components, and the total amount of outstanding debt makes up only 30 percent of the final number Credit Card Debt Falls in 2011 so Do Credit Scores.

The biggest factor, accounting for 35 percent of any credit score, turns out to be payment history, which tracks the consistency of making payments on time. Even one late payment is enough to hurt your credit score, and then it stays on your file for seven years. So while it’s very easy to damage your credit score, restoring it is a slow and difficult process.

Takeaway

Credit Card Debt Drops in 2011, So Credit Scores In the months immediately following the September 2008 financial meltdown, more Americans than ever fell behind on their credit card payments and the same was true of their home mortgages. Charges in both categories shot to record highs. Although the total amount of credit card debt began to decline after Lehman’s collapse and has since fallen by 18.6 percent, the damage to consumer credit scores has already been done, and as we can see, consumers are still suffering the consequences and will continue to do so for years to come Credit Card Debt Falls in 2011 so Do Credit Scores.

what can you do about it? If you have a delinquency on your record, there is nothing you can do to get it expunged until seven years after the event. If this period has expired and you still see the item on your credit report, contact the credit bureaus and ask them to remove it. By law, they have 30 days to comply with your request.

If you have a charge on your file, contact your lender and offer to pay it. Creditors are usually willing to settle charge-off accounts for amounts as low as 50 percent or less of what they originally owed (depending on how much time has passed since the charge-off). Once the bill is paid off, make sure it is accurately listed on your credit report. It will still be classified as a defamatory item, but it is viewed much more favorably by potential lenders than outstanding charges Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in 2011 so Do Credit Scores.

At the same time, make sure you make all your payments on time. Even missing payments for small amounts like a cell phone or gas bill can cause big damage. It will take time, but eventually you will start to see your credit score rise and you will be able to get new credit again.

Additionally, most top-scoring consumers owe less than $2,500 on revolving accounts, according to myfico.com. (In some cases, a low utilization ratio has a more positive impact on your score than not using any available credit at all, Arkali said.)

Of course, lenders also typically consider other items, including income, length of employment, stable housing, or other aspects of your financial life that won’t appear on your credit report or be reflected in your score Credit Card Debt Falls in 2011 so Do Credit Scores.

To illustrate the difference interest rates can make: A $200,000 mortgage paying 3.5% over 30 years accrues roughly $123,000 in interest. Just half a percentage point higher, 4%, would result in paying about $143,500 in interest over the same period — $20,500 more. And at 4.5%, the interest would be more than $164,500 – $41,500 more than at 3.5%.

More from personal finance Credit Card Debt Falls in 2011 so Do Credit Scores:
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More consumers are using credit cards for purchases under $10

It’s also worth noting that there’s only one relatively high balance on the card, which can negatively affect your score more than you think Credit Card Debt Falls in 2011 so Do Credit Scores.

“It could hurt your score if you max out one card even though others have low utilization,” said Rod Griffin, director of consumer education and awareness for Experian.

He also said that once you exceed the 30% utilization rate, your score will start to drop faster if your debt continues to climb.

From a personal finance perspective, the recommended limit can be a good way to reduce your plastic consumption.

“It encourages people to keep debt levels manageable,” said Bruce McClary, a spokesman for the National Foundation for Credit Counseling. “It also ensures you have room to cover unexpected expenses Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in 2011 so Do Credit Scores.”

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But at the same time, charging balances from month to month — which about 60% of consumers do — can be costly. The average interest rate on credit cards is about 17.7%, according to CreditCards.com. Ten years ago it was about 12%.

American households owe a combined $1.07 trillion on credit cards, according to data from the Federal Reserve in June. While the amount has fallen slightly since May, it has been on an upward trend since 2011.

The number of consumers seriously delinquent on credit card debt (more than 90 days past due) rose to 5.17% in the second quarter from 5.04% in the first three months of 2019, according to the Federal Reserve Bank of New York Credit Card Debt Falls in 2011 so Do Credit Scores.

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The most important:

Most negative information generally stays on credit reports for 7 years
A bankruptcy remains on your Equifax credit report for 7 to 10 years, depending on the type of bankruptcy
Closed accounts paid under the agreement remain on your Equifax credit report for up to 10 years
When it comes to credit reports, one of the most common questions is: How long does information stay on my Equifax credit report? The answer is that it depends on the type of information and whether it is considered “positive” or “negative” Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

In general, negative information such as late or missed payments, bills sent to collection agencies, unpaid bills, or bankruptcies stay on credit reports for about seven years. Here’s a breakdown of some of the different types of “negative” information and how long you can expect that information to be on your Equifax credit report Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores :

Late payments remain on your credit report for up to seven years from the original delinquent date – the date of the missed payment. A late payment will remain on your Equifax credit report even if you pay the past due balance. For example, if you had a late payment in April 2011, the late payment will appear on your Equifax credit report in April 2018, seven years after the date of the late payment.
Collection or charge-off accounts Credit Card Debt Falls in so Do Credit Scores :

If you have a late payment and don’t pay the overdue balance,

the account may eventually be seized by the original creditor and assigned to a collection agency. If this occurs, the entire collection account will be deleted seven years from the date of your first missed payment that resulted in collection or charge-off status Credit Card Debt Falls in so Do Credit Scores .

If you pay off a collection account before the seven-year period is up, it may remain on your Equifax credit report, but the account may have less of an impact on your Equifax credit score Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

Public bankruptcy records remain on your Equifax credit report for seven to 10 years, depending on the type of bankruptcy Credit Card Debt Falls in 2011 so Do Credit Scores.
Other negative accounts, such as repossessions, can also remain on your report for up to seven years from the date of the first missed payment that led to the negative balance. Negative accounts can also include foreclosures and short sales or a deed in lieu of foreclosure if reported in negative status.
Here are some examples of “positive” information and how long it stays on your Equifax credit report:

Active accounts paid according to agreement. Active credit accounts that are paid off remain on your Equifax credit report as long as the account is open and the creditor reports it.
Closed accounts paid as agreed. If the creditor reports the last status of the account as paid as agreed, the account can remain on your Equifax credit report for up to 10 years from the date the creditor reported it to Equifax Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

Finally, hard inquiries result in a potential lender, creditor or servicer requesting a copy of your Equifax credit report in response to an application for credit or certain services. These can stay on your Equifax credit report for up to two years Credit Card Debt Falls in 2011 so Do Credit Scores.

egularly checking your Equifax credit report is an important step to ensure the accuracy and completeness of your information and to confirm that any negative information will disappear after the appropriate period of time. You are entitled to a free copy of your credit report every 12 months from each of the three national credit bureaus at www.annualcreditreport.com Credit Card Debt Falls in so Do Credit Scores .

You can also create a myEquifax account and get six free Equifax credit reports each year. Additionally, you can click “Get My Free Credit Score” on your myEquifax dashboard to sign up for Equifax Core Credit™ and get a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score based on Equifax data. VantageScore is one of many types of credit scores Credit Card Debt Falls in 2011 so Do Credit Scores.

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The amount of debt you owe on your credit card is one of the biggest factors affecting your credit score. This is why maxing out your credit card is not a good idea. If you use up the entire credit limit on your card, you’ll find that your credit score may drop. And when your credit score drops, you may end up paying higher interest rates on any other credit cards or loans you take out. A low credit score can also affect your apartment rental applications, phone plans, and more Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in 2011 so Do Credit ScoresCredit Card Debt Falls in so Do Credit Scores

Here’s why:

Can Your Credit Card Affect Your Credit Score Credit Card Debt Falls in so Do Credit Scores ?
What many people don’t realize is that a credit score does not include or account for your income. So even if you feel like you can afford to max out your card, it will still have a negative effect on your score.

Research by the Consumer Financial Protection Bureau has shown that people with high incomes are just as susceptible to financial stress due to debt as those with low incomes. So when lenders see that your credit card is maxed out, they may assume you’re living above your means Credit Card Debt Falls in so Do Credit Scores .

How your credit card usage can affect your credit score
VantageScore® and FICO® credit score calculations take into account your credit utilization—the ratio between the amount of credit card debt you owe and the card’s credit limit. Credit utilization is what accounts for the 30% impact on your credit score Credit Card Debt Falls in so Do Credit Scores .

To find out what your credit utilization is, you can do the following:

Add up all your credit card balances
Add up all the credit limits of these credit cards
How much debt is too much?
There is no magic number that determines how much debt is too much, although a rule of thumb is to try to keep your credit utilization level below 30% overall Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

Remember, it’s the total or “aggregate utilization” that’s calculated based on your credit score, so getting a new card to spread your debt between cards to lower your utilization rate on each card may not be a good strategy to lower your utilization . This can potentially hurt your credit score because taking out a new card will lead to a “hard inquiry” or credit check on your score – which can also lower your score Credit Card Debt Falls in so Do Credit Scores .

However, if your available credit limit increases, this may not be affected Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

Does Paying Off Credit Card Debt Increase Your Credit Score?

You can improve your credit score by paying off a large portion of your credit card balances. Even if you don’t get your aggregate utilization rate below 30%, getting it as close to that as possible will have a positive impact. Any effort to pay off more than the minimum payment on your cards each month can result in a gradual improvement in your credit score—as long as you do all the other things that positively affect your score, like paying your bills on time Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

Does credit card debt consolidation hurt your credit score?

Most people find it much easier to pay off debt if they consolidate it into either a lower interest rate credit card or a zero interest rate card Credit Card Debt Falls in 2011 so Do Credit Scores.

These zero or low interest cards can be useful for people who want to consolidate credit card debt and reduce that balance completely before the promotional period ends Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

But keep all your credit card accounts open even after you transfer your balance to a zero or low interest promotional card. Consider cutting up physical cards if you don’t want to be tempted to use them, but keeping the account open will improve your overall usage Credit Card Debt Falls in 2011 so Do Credit Scores.

Credit cards can be excellent financial management tools, especially for unexpected expenses or to smooth out inequities in your overall monthly cash flow. However, it is important that you take an active role in monitoring your finances and how much debt you are putting on these cards Credit Card Debt Falls in so Do Credit Scores .

Try to monitor your credit utilization rate and pay your bills on time. Just these two things alone will go a long way toward improving your financial health Credit Card Debt Falls in 2011 so Do Credit Scores Credit Card Debt Falls in so Do Credit Scores .

                                   Sources