Getting Control of Your Credit Card Debt

Dated: December 1 2023

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Credit Card Stress

Your credit card debt can loom over you like a dark cloud that follows you wherever you go. It can influence everything from your ability to purchase a home, to getting a better car payment, it can even affect your rate with many insurance companies. It's not uncommon for some companies to look at your credit score before promotions or even hiring. Many governments and high level security jobs will look at your credit report yearly to see if you are a security risk when carrying too much debt.

Now more than ever the importance of managing and taking charge of your credit card debt can affect you in more ways than you realize. Typically, the more robust your credit stands, the more advantageous your loan conditions become, as well as your chances of landing that new job or promotion. In instances where your credit score is less than optimal, loan or mortgage approval remains possible, however that comes with a higher likelihood of higher interest rates, insurance payments or not getting that next promotion.

Building good credit is a gradual process, and not something that can be easily fixed right away, so it is prudent to consider it even when you're not on the verge of a major acquisition—however if home buying is on the horizon, it's time to start taking charge of your credit card debt right away. Commencing credit improvement efforts now and devising a strategy for ongoing management is crucial for your future financial endeavors.


Establishing and sustaining good credit begins with the foundation of a budget. Calculate your income and assess your current expenditures. Utilize a budget tracker to monitor your spending patterns, identifying areas where cutbacks may be possible. Prioritize the reduction of unnecessary expenses and concentrate on debt repayment.

It's essential to set incremental goals. Take a step-by-step approach as you progress toward larger objectives, such as acquiring a new home or refinancing your current one. Patience and consistent effort are key in cultivating a positive credit profile.

To effectively handle your debts, start by determining the precise amount you owe. Establish a repayment plan for existing debts and strive to steer clear of incurring new ones. Utilize free online tools, such as the reducing debt worksheet provided by the Consumer Financial Protection Bureau, to assist you in crafting a comprehensive payoff strategy. Here is the link for that worksheet:

Helpful hint: Large purchases on credit cards or opening a new line of credit can impact your Debt-To-Income (DTI) ratio as well as your current credit score. So for at least 6 months prior to applying for a new loan you need to avoid either of those.


Enhancing your credit score can improve the likelihood of receiving more favorable terms when applying for a mortgage, auto loan, or other credit. There are various strategies to elevate your score:

1. Maintain a low credit card balance: Refrain from maxing out your cards and aim to utilize no more than 30% of your available credit line, known as credit utilization.

Timely bill payments: Consistently paying your bills on time contributes to the gradual improvement of your credit score.

2. Exercise caution with new accounts: Opening too many new accounts can adversely impact your credit, so be mindful of the potential effects before applying for or accepting new credit card offers.

3. Avoid closing existing credit cards: It may seem like a good idea, but closing an active account can actually diminish your available credit, increase your credit utilization ratio, and shorten your credit history—elements that can negatively affect your credit score.

4. Keep credit cards active: While carrying a balance is not necessary, using each credit card regularly prevents automatic account closures and the resulting adverse effects on your credit. Pay off the balance promptly.

6. Seek guidance from a credit counselor: Enlist the expertise of a professional to assist you in navigating your financial journey.


Legally, you have the right to obtain a complimentary credit report annually from each of the three major credit reporting bureaus. This action has no impact on your credit score, providing you with the chance to thoroughly assess your complete credit profile. Seize this opportunity to gain insight into your credit history.

You can access your free report at:


If you notice anything that's incorrect, you are able to dispute the error so it does not negativley impact your score.


In addition to considering your credit score and credit history, lenders also assess your debt-to-income (DTI) ratio when evaluating your loan eligibility.

Your DTI ratio represents the percentage of your gross monthly income that goes towards total monthly recurring debt payments. To calculate this ratio, sum up your monthly recurring debt payments—such as rent, student or car loan payments, alimony, child support, minimum credit card payments, and any other recurring debt obligations—then divide that total by your gross monthly income (the total monthly income before tax deductions).

While specific loan types may have varying DTI requirements, it is prudent to aim for a low DTI ratio across the board. Keeping your DTI ratio as minimal as possible is generally advisable.


While day to day expenses like groceries, utilities, living expenses and taxes don't factor into your DTI it's important to keep track of those expenses because they need to be considered when you are budgeting for your monthly income.

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