Shake the Habit: Cutting Credit Card Spending Can Prove a Credit Fix

One of the biggest reasons many Americans run into financial problems and potentially run into the need to repair past credit mistakes is because they rely on their credit cards too heavily.

These cards can be one of the fastest ways to run into large debt loads, and if they are not addressed for a long period of time, the interest charges can build up very quickly and further complicate matters. But because many Americans use these cards to make everyday purchases, the damage can be significant but slow. For this reason, it might be wise to wean yourself off these accounts as a means of getting your overall finances back on track.

When you're trying to reduce your credit card debt, the two best things you can do are to start making larger monthly payments into those balances and also try to cut out using the accounts as much as you possibly can. The reason larger payments are important is that they'll more quickly reduce your debt and slow the rate at which your interest charges add up. You should also try to slash your card use, altogether if possible, so that you're not shoveling more dirt into the hole you're also trying to dig yourself out of.

When you're undertaking such a heavy task, though, it's important to set goals for yourself. In this case, the goal you'll generally want to shoot for, as far as your credit scores are concerned, is owing about 30 percent of your total credit card limits, or less. This is vital because that's the point at which you max out what is known as your "credit utilization ratio," which coincidentally makes up 30 percent of your overall scores. The old myth about lenders liking it when you owe them a lot of money isn't all that true, so making sure you carry as little debt as possible instead will go a long way toward ensuring your credit health.

It might also be wise to make sure you're checking your credit reports regularly during this time, as this will help you keep tabs on the progress you're making, as well as help you determine whether any unfair markings are affecting your scores. If so, working with a credit repair law firm may help you better achieve your credit fix goals.