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Understand the importance of utilization in debt management

For those in Connecticut who are considering filing for personal bankruptcy, repairing the damage done to their credit score is a top priority for the months that will follow the bankruptcy process. Having that kind of forward-facing focus can make it easier to begin the steps leading to bankruptcy, which is a decision that no one wants to have to make. Fortunately, there are plenty of positives that accompany the choice to seek bankruptcy protection, including the opportunity to rebuild toward a solid credit score by using savvy debt management practices.

One of the most important aspects of credit repair involves credit utilization. This is simply the amount of available credit that a consumer puts to use. In order to increase credit scoring, it is necessary to use only a small portion of that available credit. Experts suggest charging between 10 and 30 percent of each credit card's limit.

So, for a consumer who holds a credit card with a $2,000 limit, that means keeping the balance below $600 at all times. That may require a degree of discipline, but credit experts believe that this level of usage is the fastest path back to a good credit score. They also point out that debt utilization accounts for as much as 30 percent of the "weight" used to calculate an individual's credit score.

For Connecticut residents who are thinking about filing for personal bankruptcy, credit damage should not be a determining factor. While it is true that bankruptcy will cause an immediate drop in credit scores, that damage can be made up for over a relatively short period of time. Understanding how credit utilization and other debt management techniques come into play in determining credit scores is a great way to get a start toward rebuilding a strong financial future.  

Source:, "The No-Sweat Guide to Managing Your Credit", Joshua Johnstun, May 31, 2017

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