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4 Tips to Lower Your Credit Utilization


This news story was published on January 28, 2021.
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Good credit utilization is dependent on a person’s spending habits. Therefore, if someone spends more than their credit availability, which means that person will end up having poor business credit. Maintaining a thirty percent credit limit is highly advisable to help maintain a good credit utilization score. When someone has low credit utilization, there is a very high tendency to get into business credit debts. This kind of debt can easily lead you to borrow aimlessly. Hence, you end up having a business credit score that many banks, net 30 office supply companies and other lenders will avoid working with as they are not sure of you paying them back. Below are four tips to lower your credit utilization. 

  1. Decrease your spending

Many times people spend what they do not have leading to a rising credit utilization rate. This kind of behavior that once you start is hard to stop. Once you realize your credit utilization rate is steadily rising, this is already a red flag and needs immediate action. Therefore, it is important to halt all your credit card spending for a while and opt for cash payments. This helps you to put your credit cards back in order. Also, it will help you reduce your credit card debts. However, a credit utilization ratio that is not right needs a lot of discipline to get it back on track, and it will take a lot of time. Thus, cash payments will mostly be your way out till you offset the debt accumulation to lower the business credit utilization rate.

  1. Clear your debts early

Debts can hinder someone from progressing or even losing their credit limits. It is vital once you see that there is a red flag on your credit utilization ratio, you check on your spending habits. In this way, you will buy what is necessary and avoid impulse buying. Therefore, to clear your debts, you need to go back and check your expenditure lifestyle. People tend to live beyond their means, this being a great contributor to one incurring huge debts in the long run. An easier way to help one reduce their existing debts faster is by using cash payments for the time being. However, once you can clear all your outstanding balances, you must wait for a while before making any purchases on your credit card.

  1. Increase your credit limit

This is a new trick that not many know. However, an increase in your credit limit is wholly dependent on your credit history with the lenders. A good relationship with lenders will make the approval of your request much faster. A good relationship means that you have been paying your outstanding balances on time. Plus, you are attempting to clear your existing debts, lowering your credit utilization ratio to a thirty percent minimum. This kind of relationship will help you get a credit limit increase faster than you think. Late payments and existing debt is one way that can make the credit issuers avoid giving you any credit limit increment due to your negative parameters.

  1. Schedule Credit Card payments more often

Credit card payments done more than once will help you have a good credit utilization rate. This goes a long way in helping you lower your utilization ratio. Through this, you will secure good business credits because of your good standings with lenders. Multiple payments each month is one way you will be able to evade debts and huge outstanding balances. However, understanding how you use your money is one way to control your business credit utilization rate in the long run.

To sum up, to maintain good credits, ensure to have a reminder or put all your payments on auto-pay. In this way, you will be sure you will not miss any payment. If you happen to fall into debt and have high outstanding balances. Cash payments during such periods are the best way out. A healthy relationship with the credit issuers is the best thing that you can do for yourself. This means that your monthly payments will be on time, and your business credit utilization ratio is on a thirty percent minimum all year round.

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