Credit card debt in the U.S. has hit $1 trillion for the first time on record.
The Federal Reserve Bank of St. Louis reportedmore than $1 trillion in total balances on credit cards and other revolving plans across all commercial banks for the week of July 26. Revolving credit plans let you borrow money up to a maximum and pay it back over time. You can borrow again as needed, according to Experian, a consumer credit reporting company.
In July of last year, that number sat just below $900 billion.
So how can carrying credit card debt impact you?
"Balances on credit cards — or what we call utilization rate, your balances compared to your limit — is the second most important factor in credit scores," said Rod Griffin, the senior director of public education for Experian.
Your credit scores can impact your borrowing abilities for big purchase items like homes and cars.
"You have potentially hundreds of different credit scores. And the reason that you have different scores is that, while they all look at the same information, they're weighing it differently depending on the kind of lending that's being done," Griffin said.
So how can you boost your credit score?
"If you take care of your credit report, you're going to have good credit scores. And what that means is, you have to do two things: You have to pay all of your bills on time every single time, and you have to keep your credit card balances as low as you possibly can. Paying them off in full is ideal,” he said.
Another tip is to self-report positive information proactively.
"In the past, utility companies, cellphone companies, landlords and rent management companies did not report positive information to Experian, and still largely don't, or to the other credit bureaus," Griffin explained. There are three major credit bureaus in the country: Equifax, Experian, and TransUnion.
"Use the tools that are available to you today that weren't three or four years ago. Just a couple years ago, you had no ability to report positive information proactively. Now you can," he said. Griffin recommends Experian Boost as a way to report that information.
Other websites, including consumer financial service company Bankrate, detailhow you can boost your credit score with self-reporting. The Consumer Financial Protection Bureau offers more information on credit reports and how to monitor your credit score here.
Griffin said these high credit card debt numbers aren't too concerning, yet.
"We're not seeing delinquency rates skyrocket, at least not yet. People seem to be doing OK in managing those debts, but it's something to watch," he said.
@scrippsnews Credit card debt passed $1 trillion at the end of July, according to the Federal Reserve Bank of St. Louis. How can that impact your credit, and what are the best ways to improve your credit score? #money #CreditScore #debt ♬ original sound - Scripps News
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