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Read MoreMinimum payments mostly cover interest, not principal, prolonging debt repayment and costing more over time. This can also signal financial stress to lenders.
You can calculate it yourself by adding up all your credit card balances and dividing by the sum of all your credit limits. Your credit card statements and online accounts clearly show your current balance and credit limit for each card. Many free credit score apps and websites also display your overall utilization ratio.
The hardship arrangement may be canceled immediately, and the account could revert to its original terms, with accrued fees and penalties added. Communication with your creditor is critical if you anticipate missing a payment.
Focus on two things: 1) Pay all current bills on time, every time. 2) Pay down credit card balances to get your utilization below 30%, ideally below 10%.
No. This is a critical misconception. A charge-off is an internal accounting term for the creditor. The debt is still legally owed by you. The creditor can still pursue collection, sell the debt to a collection agency, or sue you for the balance.