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Love and Debt: Why you need to talk about money

How to Stop Living Paycheck to Paycheck

Where to go for mortgage and debt help

What You Should Know About Debt Settlement

Create a plan to deal with medical debt

Options for Higher Education

Will Changes in Credit Reporting Affect You?

What to do if your medical bills are turned over to collections

What to do if your spouse can't pay his or her bills

What to do when a family member ruins your credit

Homeownership is possible

What you need to know about the IRS and collection agencies

Will being turned down for a store credit card hurt my credit?

Beware of credit repair

Debt Management versus Debt Settlement

How to get ahead of late fees

Is There a Service That Helps You Not Pay Bills

Is a Debt Owed

Patience is the key to furnishing a new home

How to split expenses with your partner

Will my boyfriend's bad credit affect me?

What to do if your account is turned over to collections

Personal Credit and Starting a Business

Finding Money to Reduce Your Debt and Improve Your Credit

Simple Keys to Personal Finance

Be vigilant to avoid telephone and internet scams

Debt Settlement

Understanding credit utilization

The pros and cons of skipping a payment

Keep an open line of communication with parents about their finances.

Make a Choice to Get Ahead Financially

What to do when a relative asks you for money

Should You Buy a Home Now or Wait?

The difference between debt settlement and debt management

The negative impact of paying a payment 30 days late

Stressed by Finances

How to navigate two significant financial decisions: starting a family and buying a home

How to advise someone close to you who is coming into a significant amount of money

Make a Conscious Decision on How to Spend Your Money

How do you know if you have a good credit score?

Americans spend more money eating out than on groceries

Having Good Credit Saves You Money

Developing good money habits with your first job

How to save for a home

How to Know if you are Ready for Home Ownership

When is the right time to buy a home?

You can improve your credit to buy a home

Plan a Memorable Vacation Without Incurring Debt

The Hidden Costs of Payday Loans

Be Wary of Credit Repair Services

Use Caution when playing the credit card game

What does it mean to say bankruptcy gives you a clean slate?

How your credit is affected by various debt options

Be wary of predatory small business loans

What to do if you fall behind on mortgage payments

Financing a College Education

Money, Credit and Relationships

Should you be concerned with your date's credit scores?

Best options for a small, short-term loan

How to help a relative who is always borrowing money from you

Skipping a Payment over the Holidays

What to do if you are overwhelmed by medical bills

Make your financial intention a financial goal you can achieve

What to do when a collector calls you

The difference between paying bills and managing your money

My wife and I have gone through some tough financial times, which eventually led us to file for bankruptcy.  Following this experience, I don’t ever want to use credit again, but my wife

What do I need to know to pay ahead on my mortgage?

What to do if you get an unsolicited credit card in the mail

What to do when moving in to share expenses doesn't work out

Understanding credit utilization

Q. A friend was recently explaining that a credit score is made up of different parts.  He told me that my credit score is based in part on what he called credit utilization, but I didn’t understand what he meant by this.  Can you explain what credit utilization is and why I should be concerned about it?

A. We all have multiple credit scores. The most common type of credit score is the FICO score by Fair Isaac. There are even multiple versions of the FICO score. Given the complexity of the credit scoring system, it helps to understand how your score is calculated.

Your score is calculated based on the following: Thirty-five percent of your credit score is based on your payment history, while 30 percent is based on your credit utilization. Fifteen percent of your score is based the length of your credit history, and 10 percent is based on the number of credit lines you have opened within the last 12 months. The last 10 percent of your credit score is based on the types of credit that have been extended to you.

The most significant factor in determining your credit score is how you handle your bills, but credit utilization—at 30 percent of your score—is a close second.  Credit utilization is the amount of credit that you have available to you that you are currently using. Let’s say you have two credit cards, each with a $5,000 credit limit. If you have charged $5,000 on each card, then you have utilized all the available credit to you, which will lower your credit score.   

Most people have and use credit. The key to building good credit is to manage it well. One way to do this is to ensure that you just don’t use all of the credit available to you. You might think of credit as you would a scale. As you pay down your balances, your score increases. Alternately, if you use more of the credit available and your balances increase, then your score decreases. You will need to find your own equilibrium.

Your credit score can change daily, as it represents a snapshot in time. Let’s say it’s a Monday and you have a $1,000 balance on your credit card.  On the following Friday, your payment of $1,000 posts to your credit card, bringing your balance to zero. In this scenario, your credit score on Monday would be different than what it would be on Friday.  

Your credit impacts you in a variety of ways. It can determine your ability to rent or buy a home, to get insurance and utilities or to purchase a car you need to get to work. In some cases, your credit history can even influence your ability to get a job. For lenders and prospective employers, your past history is a predictor of your future behavior.  This makes it even more important for you to learn how you can maintain or improve your score.

Bonnie Spain is the executive director of the American Center for Credit Education and Consumer Credit Counseling Service of the Black Hills. For more information, email

The material in this transmission is provided for personal, non-commercial, educational, and informational purposes only. ACCE makes no representations or warranties with respect to the accuracy or completeness of the contents of this transmission and assumes no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. You should consult a professional where appropriate.