Revolving Credit (Credit Cards) and what you need to know about them

Revolving credit is what the mortgage industry calls Credit Card debt and it is often greatly misunderstood in how it affects your credit score.  It’s also one of the the things that I strive to educate my clients and referral partners about as much as possible.  A very regular example of a common misconception about this type of debt is that if you pay your credit card off every month it won’t negatively effect your credit.  This is not necessarily true.  What you really want to pay attention to is your percentage of utilization of your cards.  For example:

You have a Capital One credit card that has a $500 limit.  Each month you charge up maybe $475 on the card and pay it off in full on the first of each month.  The problem is that you don’t necessarily know when Capital One is reporting that debt to the three major credit bureaus (Experian, Equifax and Transunion).  If they are reporting the debt on the 30th of each month then they are always reporting you card being maxed out (they only report once a month, not constantly).  Therefore this will constantly keep your credit score down.

What you really want to do is never let the balance of your credit card get above 30% of the limit.  Doing this and paying off each month shows responsible utilization of revolving debt and the credit bureaus will reflect that in your scores. If you ever have questions about Revolving Credit or how to increase your credit score as high as possible please reach out to me at 910-280-8888.



As always, if you have questions about mortgage guidelines, terms or rates please call/text me at 910-250-8888. I proudly serve the Wilmington, Leland, Hampstead, Jacksonville, Southport areas and am licensed in all of North & South Carolina and Virginia!
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