Daily Dupaco

Friday, May 30, 2014

Capacity is key to your credit score

I was checking an e-mail recently when my computer monitor flickered. A few seconds later, it happened again – and never came back on.

Out of desperation, I tried restarting my computer several times. But nothing worked. The monitor remained completely and depressingly black.

I turned to the computer experts, who confirmed what I had suspected (but admittedly had been ignoring). My computer had reached its capacity. The hard drive was almost out of space and consequently had become more than sluggish.

Much like a computer, credit works in your favor when you keep the capacity in check.

When you have large balances on your credit card, it takes away your capacity – how much credit you have at your disposal versus how much credit you are using. The lower your balance is, the higher your score is, even if you pay off your balance each month.

Your best bet is to carry a balance with less than 20 percent of your available line of credit at any given time, because you never know when your credit will be pulled.

Capacity makes up 30 percent of your credit score. And taking care of your credit is an integral part of a healthy financial life. Many lenders, even some insurance companies, make decisions and charge rates based on your credit score, which is calculated by credit bureaus.

"When we talk to members about their credit score, everyone knows they're supposed to pay their bills and debts on time," says Aaron Plein, vice president, regional market manager at Dupaco. "But a lot of consumers don't understand the importance of keeping their balances down on their credit card."

To help get a handle on your credit score, Dupaco offers free Credit History Lessons to its members. During a Credit History Lesson, we pull your credit score and review your current credit situation. Then, we discuss steps that should be taken to improve your credit score and overall financial situation. Call Dupaco today to schedule your FREE Credit History Lesson!  


By Emily Kittle


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