Paying down debt is not just a good idea, it's a great one. One of the big components of your credit score is called the utilization ratio. That's your balance divided by your available credit. So, if you have $5,000 in balances and $10,000 in total credit limits, your utilization ratio is 50%. Ideally, you want yours to be below 20-25%, with $0 being the ultimate goal. Utilization is about 30-35% of your credit score so if you get below 20%, you can see immediate impact on your score.
Like LaKhaun said, paying on time is HUGE too. That's another 30% of your score - % of on time payments. If that's at 100%, and your utilization rate is low......you should have a fantastic credit score.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.