![]() ![]() ![]() ![]() For every debt you pay down, your credit utilization will decrease, which will help with your overall credit. Ideally, you want to try to get your credit utilization down to under 50%. So it’s important to pay down as much of your debt as you can. If you are using a good chunk of your available credit, it can have a negative impact on your credit score. Let’s say your available credit limit is $10,000 and you’re using $7,500. The amount of debt you have owing in relation to the available credit you have – known as credit utilization – is the second most important factor in your credit score. In addition to getting your accounts up to date, paying down your debts is also a key part of rebuilding credit. If you and your creditors aren’t able to work out an arrangement, an accredited, non-profit credit counsellor may be able to help you create a plan to bring your accounts up to date, and pay down your debt. If you’re in a tough spot and you can’t afford to bring your delinquent accounts up to date at once, contact your creditors to see if you can negotiate a payment arrangement that works with your budget. Your payment history is the largest factor affecting your credit score, so if you’ve been behind on your payments – or haven’t been making your payments on time – your credit situation likely won’t improve much unless you get your accounts up to date. Step 2: Make Arrangements to Bring Your Accounts Up To Date and Pay Down Debts ![]()
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