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Michael D. Hart, P.C.
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Carrying a balance bad idea for credit score

According to a report published by creditcards.com, approximately 43 million people across the U.S. have carried a debt balance on their credit cards in order to improve their credit scores. That amounts to 22 percent of American credit card users, and they may not be influencing their scores in the way they think. Carrying a balance is not among the five primary criteria that make up a Virginia consumer's credit score.

One of the factors that does go toward a person's credit score, though, is his or her debt-to-credit ratio, also referred to as the utilization rate. The more debt a person has relative to his or her total available credit, the lower his or her credit score will be, generally speaking. Balances carried forward hurt this measure.

Payment history is also important. The credit system rewards consistency. A senior analyst at creditcards.com said the best thing a person can do to improve his or her credit score is to pay bills on time and in full every month. According to the creditcards.com report, more than 40 percent of cardholders have made payments late. Almost two-thirds of those late payments were for reasons like simply forgetting or being busy. Not having the money at the time accounted for 35.4 percent of late payments.

For people who are struggling to make payments, there may be options to reduce or eliminate debt. An attorney may be able to help people restructure or eliminate debts via bankruptcy. For people who have reliable income but who struggle to make payments, a Chapter 13 bankruptcy might allow for the restructuring of debts. An attorney might draft and file a petition to begin bankruptcy proceedings or draft a repayment plan to fit the requirements of the court and the needs of the client.

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Michael D. Hart, P.C.
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Roanoke, VA 24011

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