Credit cards and financial challenges can create problems for individuals and families as we have seen in our economy since 2008. Creditors are more cautious than normal when extending credit because of the troubles our economy has seen with credit card debt.
However, the credit card debt in Alabama has dropped 22 percent compared to October 2011. It is the third lowest in the nation; yet, the average credit score is one of the lowest as well. Not only is the credit score one of the lowest in country, within the state of Alabama and over the last year the average credit score has dropped nine points.
Credit card debt is something that can not only help to improve your credit score, but it can also severely negatively affect your credit score. A higher credit score will allow individuals to obtain a better interest rate on future loans. Thus, a credit score is extremely important, especially when one considers future purchases. In fact, a lower credit score can reduce your chances of being qualified for mortgages, auto financing or other extremely large and important purchases. Even though one may have credit card debt, financing for future payments is still an option as long as debts are paid on time.
Credit card debt has not only helped but also hurt many American citizens. Bad credit has caused extended problems for many Americans. However, with the amount of debt falling, this could be a good sign for Americans who are trying to improve the economy.
Source: Birmingham Business Journal, "Credit Karma: Mortgage, credit card debt drops in Alabama," Antrenise Cole, Nov. 14, 2012