How many years does it take to clear your credit when you owe money?

Q: How does owing money on a credit card affect credit scores and how long does it take for the bad credit to clear from your history?

A: There are many factors that can lower your credit scores. One major factor is a high debt-to-limit ratio—owing too much money on credit cards can dramatically decrease your credit scores. If your balances are more than 7% of the card’s limit, your scores will start to drop. The closer the balance inches up to the limit, the more your score will drop. Credit scores are sensitive to individual balance-to-limit ratios, but even more sensitive to aggregate balance-to-limit ratios. Your scores will continue to drop until your balance comes down. The rate at which your credit bounces back is dependant on a number of factors. If you would like information that is more specific to your personal credit report, you can get in touch with my office: www.northshoreadvisory.com.

Filed Under: Credit