Credit Card Debt Falls in so Do Credit Scores 2023  Consumer credit card debt fell in every single U.S.

US consumer credit card debt fell 10%Credit Card Debt Falls in so Do Credit Scores 2023:

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 Credit Card Debt Falls in so Do Credit Scores 2023.

Credit card debt is on the decline in 2011, 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 so Do Credit Scores 2023 .

In 2023 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.

The formula is likely to change in December, says Ken Lin, CEO of CreditKarma.com Credit Card Debt Falls in so Do Credit Scores 2023 :

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 Credit Card Debt Falls in so Do Credit Scores 2023 .

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 Credit Card Debt Falls in so Do Credit Scores 2023 .

The average credit score decreased by 5 points Credit Card Debt Falls in so Do Credit Scores 2023

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. Although November’s credit score – 661 – was unchanged from the previous month, it was down five points on the year. How did it happen Credit Card Debt Falls in so Do Credit Scores 2023 ?

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 so Do Credit Scores 2023 .

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 Credit Card Debt Falls in so Do Credit Scores 2023 .

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 Credit Card Debt Falls in so Do Credit Scores 2023 . 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 so Do Credit Scores 2023 .

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 Credit Card Debt Falls in so Do Credit Scores 2023 .

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 so Do Credit Scores 2023 .

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 Credit Card Debt Falls in so Do Credit Scores 2023 .

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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 so Do Credit Scores 2023 .

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 so Do Credit Scores 2023 :

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 Credit Card Debt Falls in so Do Credit Scores 2023 .
Collection or charge-off accounts:

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. 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.
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 so Do Credit Scores 2023 .

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 Credit Card Debt Falls in so Do Credit Scores 2023 :

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.
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 so Do Credit Scores 2023 .

Regularly 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.

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 so Do Credit Scores 2023 .

This year has been unlike any other, so it’s not entirely surprising that many Americans have changed the way they use their credit cards Credit Card Debt Falls in so Do Credit Scores 2023 .

In 2020, millions of Americans have filed for unemployment, and millions more have shifted from commuting to the office to work from home full-time as a result of the pandemic. Stay-at-home orders across the country mean people are dining, shopping and traveling less. And as a result, many have seen significant changes in their daily spending. And these changes have a positive impact on their credit utilization Credit Card Debt Falls in so Do Credit Scores 2023 .

The latest data from Experian shows a record decline in credit card balances in 2020, after nearly a decade of steady growth. For eight consecutive years, consumer credit card debt (not just statement balances) has risen, reaching a record high of $829 million in 2019, just before the pandemic hit.

But balances have fallen 9% in the past year: Total outstanding credit card debt in the U.S. is now around $756 billion, the lowest point since 2017 Credit Card Debt Falls in so Do Credit Scores 2023 .

At least some of this reduction in credit card debt can be attributed to CARES Act relief, including student loan payment freezes and a one-time $1,200 stimulus check Credit Card Debt Falls in so Do Credit Scores 2023 . Although Congress continues to negotiate more relief, these stimulus measures may have given some Americans room to tackle their high-interest credit card debt.

People keep opening new credit card accounts

While people were still opening new credit card accounts in 2020, it was at a much lower rate. U.S. consumers opened 12 million new credit card accounts this year, Experian data found, compared with 21 million new credit accounts added in 2019 Credit Card Debt Falls in so Do Credit Scores 2023 .

In past years, growth in new accounts has typically coincided with rising debt balances, Experian reports. However, this is the first time in the 14-year history of this analysis that the company has seen a lower debt load along with an increase in accounts Credit Card Debt Falls in so Do Credit Scores 2023 .

This means that new accounts are being used to pay down debt (eg with 0% APR balance transfer cards) or that customers are using new cards responsibly while paying off old debt on cards they already have.

Stay on top of your new accounts: The FICO® Basic Credit Monitoring Service monitors your Experian credit report and tracks account status changes (including late payments), new card/account inquiries, and balance changes of $1 or more.

Consumers are charging less on their credit cards
Despite tough economic conditions, many Americans did not rely on credit to get by. Consumers saw their average credit card balance drop by $879 Credit Card Debt Falls in so Do Credit Scores 2023 .

“It is not far-fetched to expect consumers to rely more on revolving debt during the economic downturn,” writes Stefan Lembo-Stolba on Experian’s data blog. “However, the reality is that three quarters into 2020, US credit card debt is the lowest it’s been in a long time. Credit Card Debt Falls in so Do Credit Scores 2023 ”

The drop in average credit card balance of $879 represents a 14% decrease from 2019. The average debt on individual credit cards has not decreased year-over-year since 2011.

Lower credit card balances contributed to the lowest average credit utilization rate in 10 years at 25% (compared to 29% in 2019).

Delinquencies are down despite the recession

There were also fewer late and missed payments on credit card accounts in 2020: The percentage of delinquent accounts 30, 60 and 90 days past due decreased Credit Card Debt Falls in so Do Credit Scores 2023 .

It was the first time in five years that there was no year-on-year increase. The last time Experian reported a reduction in delinquency rates was in 2014.

By making timely payments, cardholders protect both their credit scores and overall financial health. Making payments on time is the most important factor in calculating your credit score. Not to mention, missing payments add up to high fees.

Never get a late fee: Check out our list of credit cards that don’t charge late fees. Favorites include the Citi Simplicity® Card – No Late Fees Ever, the Apple Card and the Petal® 2 “Cash Back, No Fees” Visa® Credit Card.

Bottom Line
This year has certainly been a challenge for most American families, but a change in spending might not be a bad thing Credit Card Debt Falls in so Do Credit Scores 2023 .

If you’ve benefited from a lower credit card balance and better credit score, consider how you might continue to implement some of these new habits. The pandemic has allowed many people to reassess their finances, and the end of the year is a good time to think about how you can apply these positive changes in 2021 and beyond.

Apple Card information was independently collected by CNBC and was not reviewed or provided to the publisher prior to publication.

Petal 2 Visa Credit Card issued by WebBank Credit Card Debt Falls in so Do Credit Scores 2023 .

Editorial Note: The opinions, analyses, reviews, or recommendations expressed in this article are those of the Select editorial team only and have not been reviewed, endorsed, or otherwise endorsed by any third party.

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 so Do Credit Scores 2023 .

Here’s why:

Can Your Credit Card Affect Your Credit Score?
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.

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 2023 .

To find out what your credit utilization is, you can do the following Credit Card Debt Falls in so Do Credit Scores:

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.

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.

However, if your available credit limit increases, this may not be affected Credit Card Debt Falls in so Do Credit Scores 2023.

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.

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.

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.

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 so Do Credit Scores 2023 .

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.

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.

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