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How Does Debt Affect Your Credit Score?

As you go about your day, you may or may not realize the amount of money you are spending.  Groceries, mortgage payments, and utility bills add up and can make a big dent in your finances—which can come as a surprise for some. 

Before you consider a bankruptcy lawyer for Chapter 7 or Chapter 13 bankruptcy, you should first take a look at your credit score.  In addition to debt, a variety of financial factors affect your credit score.  But, for the sake of this article, here is how debt affects your credit score:


What Is Borrowed and Available- A huge part of determining your credit score is based on the relationship between what debt you owe and what your balances are.  In order to receive a higher credit, the amount of debt you owe should be less in proportion to what your available balances show.

New Debt- Roughly 10% of your credit score deals with “new debts”.  If you recently took out a loan for, say, a car or a house, then these would constitute for a new debt. 

History- Last, but certainly not least, is your payment history.  Your personal payment history makes up for the largest chunk of your credit score and is brought down by late payments on bills.  So, if your debt is accumulated from late payments, this section of your credit score will show poor results.


If you would like to get out of debt and bump up your credit score or are in need of a bankruptcy attorney in Chicago to help out with Chapter 7 and Chapter 13 bankruptcy, please contact Cutler & Associates, LTD.  We will work hard to help your financial situation—whatever it may be.  So please, for a bankruptcy attorney who can help you, contact us today.

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