Credit cards can be a useful tool for establishing credit and managing your finances. But if you rely on them too much, that’s how you can end up with a 480 credit score.
Corey B. learned this lesson. Then he learned how to turn things around with our help.
A 480 credit score caused Corey’s mortgage lender to connect him with a HUD-approved, nonprofit credit counselor on the CredEvolv platform. His counselor successfully removed 4 collections and 3 late payments from his credit report. Meanwhile, the budget they created together enabled Corey to reduce his credit utilization from 77% to 4%. The result: a 647 credit score in 8 months, beating his personal goal of 600 and his mortgage lender’s goal of 620!
Why are high credit card balances so bad?
Having a high utilization ratio can hurt your credit scores – even when you make the minimum required payments on time every month. It also makes it increasingly difficult to qualify for more credit. In addition to potentially causing a 480 credit score, high credit card balances can increase your debt-to-income ratio (DTI).
Lenders look at your DTI ratio to gauge how much of your income is already tied up in debt payments. A lower DTI signals to lenders that you have room in your budget to take on more debt without overextending yourself. On the other hand, a higher DTI might raise red flags, suggesting you could struggle to manage additional monthly payments.
In general:
- A DTI below 36% is good and shows you have a manageable debt level.
- A DTI between 36-49% is acceptable but may make it harder to qualify for some loans or the best interest rates.
- A DTI above 50% could limit your borrowing options and indicate a possibility of becoming overwhelmed by debt.
“Should I try to fix my 480 credit score myself?”
The collaboration between our clients and the counselors we connect them with on our platform is incredibly valuable. That’s why we try to steer you away from DIYing your own credit fixes. There are many mistakes you can make when you try to fix your credit yourself.
Flying solo while trying to improve your credit isn’t impossible. But it’s a lot easier when you have experts in your corner. Specifically, the credit counselors on our platform. That’s because:
- They know what they’re doing.
- They have your best interest at heart.
- They’re not trying to keep you in a program for longer than you need to be.
- They’re not looking to make a profit off your hard times.
They’re here to coach you to success and teach you the responsible credit practices that can improve your life. You’ll notice the benefits while you’re enrolled in the program, More importantly, you can enjoy them for years after you’ve achieved the credit score you want and deserve.
Read more credit success stories here.