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Things To Do For Best Credit Utilization

Pay Down Your Credit Cards

The simplest but perhaps most difficult way to lower your utilization ration is to pay off your debt. For example, Dan has an outstanding balance of $5,000 with a $12,000 credit limit. He managed to pay off $3,000, thereby reducing his utilization ratio from 41.6 to 16.6 percent. Attacking your debt is a quick solution, but it may not be plausible for everyone.


Increase Your Credit Limit

If paying down debt isn't an option, contact your creditor and ask them to conservatively increase your credit limit. For example, if Dan increased his total credit limit to $14,000, his initial ration would be reduced from 41.6 to 35.7 percent. By increasing your credit limit, your utilization ration will reduce automatically.


Apply For New Credit Card

Apply for a new credit card if you get approved you will immediately increase your ratio. Do not apply for a credit card if you have just missed some payments recently.

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