Texas Credit Card Debt
The state of Texas (TX) is an historic treasure in the Southwest, with history and traditions dating back hundreds of years and influences from Indian, French, Spanish and Mexican occupation. The "Lone Star State" gets its name not only from the single star emblazoned on the state flag, but also from the singular spirit of independence shown by locals. From Austin to Dallas and San Antonio to Houston, TX, there is an attitude of pride and optimism from residents who say "everything is bigger in Texas," a famous expression not far from the truth geographically, historically or in terms of population. Texas has the largest land mass of any state in the contiguous 48 states, and is second in population nationally with over 23 million residents according to recent estimates.
With severe economic woes affecting millions of people across the United States as well as the rest of the world, homeowners in places like Galveston, TX are just as likely to feel the pinch as those in any other part of the country. The state's unemployment rate sits at an even eight percent as of August 2009, compared to the national average of 9.7 percent. In some ways the state is well-equipped to deal with economic troubles, with multiple profitable industries seemingly offering opportunities for growth. But even the famous TX oilmen are feeling the effects of the current economic downturn, with many Americans choosing or being forced to drive less to save money or because of lack of employment. Interestingly enough, the petroleum industry is currently only the tenth-leading job market in the state. With service industries such as restaurants and hotels making up four of the top nine jobs providers, the nation's recent woes have hit the state particularly hard, with people cutting back on soliciting services and the industry itself making cuts to survive.
Credit Card Debt in Texas
As the markets have continued to change and evolve, the use of credit cards as a means of making purchases has also changed. In the ideal family scenario, credit cards are reserved for emergencies, or otherwise used for convenience and paid off each month. But over the past 20 years, the use of credit cards has increased dramatically, with the average cardholder possessing nine cards as of 2008. Credit card debt has also risen markedly, with the average household in the US carrying $8700 in credit card debt according to recent statistics. With a median household income of under $48,000 and similar debt numbers to the US average, Texas citizens have a particular need for exploration of their debt reduction options. Credit card debt and the resulting strain it can have on a family's finances can lead to many other, interrelated financial woes, so the search for a solution takes on an even greater importance.
Debt Consolidation Simplifies Repayment
Many cardholders do not realize that one viable option exists for virtually everyone carrying debt to help them reduce or eliminate interest and thus help them manage their debt as they pay it down. Debt consolidation is a great starting point for anyone in Texas seeking personal solutions for their credit woes. Debt consolidation is just what it sounds like-combining all personal credit card debt into one account and simplifying the repayment process by providing for one single monthly payment instead of many. Debt consolidation also allows TX consumers to enjoy lower interest rates, which in very obvious ways promote debt reduction and ease of repayment. Simply reducing the rate of interest charged on existing debt allows debt holders to devote more of their monthly payments to their principal balance, speeding up the process of repayment and often saving them thousands of dollars in interest over the life of the debt.
As one element of a financial lifestyle makeover, debt consolidation and reduction can play a critical role in allowing households from Austin to San Antonio, TX to get a fresh start and begin the process of rebuilding both their savings and their credit profile. Financial reform is a discipline that takes a great deal of hard work and determination, but it can be accomplished by anyone willing to put in the time to examine their finances and analyze their spending patterns for what they are rather than simply justifying extravagance or explaining away bad choices. Everyone makes financial mistakes at one time or another, but there is no reason for any debt holder to give up and admit defeat. Expert advice and advocacy can help consumers understand the processes involved in building and maintaining a positive credit profile.
What is a FICO Score?
FICO scores are of particular interest to Texans because Texas has the lowest average FICO score in the country at 651. Many have done damage to their FICO scores through bad financial decisions or ignorance of what makes up a credit profile. Few realize how simple a credit score really is to understand. 65 percent of an individual's score is based upon credit payment history and credit balances. Just being armed with this knowledge could help many debt holders to better manage their credit and improve their scores. Credit payment history takes into account the presence of foreclosures, bankruptcy and tax liens, but is also influenced by multiple and/or recent late payments, especially those more than 30 days late. Focusing on making payments on time and not skipping payments or letting them lapse more than 30 days behind can do a great deal over time to improve credit scores.
Credit balances are a sometimes misunderstood component of a FICO score. It is important to understand and take advantage of understanding what credit balances really do to a credit score, because they make up 30 percent of a FICO score all by themselves. Credit balances refer to the amount of time debt held by a cardholder relative to their overall available credit. Ideally, to promote a better credit score, cardholders will have low card balances relative to their credit limits, at least keeping them below 50 percent. Still, another component of credit scores is card history, which rewards accounts held for a long time and kept active. When trying to strike a balance between having a healthy credit history by keeping old accounts active and maintaining appropriate credit balances, cardholders should remember that credit balances are twice as significant mathematically as a component of the FICO score.
Expert Advice Key to Sound Financial Decisions
In the event of a cardholder trying to decide which cards to keep and which ones to cancel, it is generally more advantageous to keep the older ones open and close the newer ones. With that said, it is never a good idea to keep an account open when it in arrears or default, when the more advantageous option of debt consolidation exists. Credit card debt is not automatically something that is punished on credit scores, but excessive debt relative to available credit and accounts that are not kept in good standing always result in credit score negatives. Seeking expert advice in managing debt and using debt consolidation to help repay debt and rebuild good credit arms consumers with the power to control their financial futures.
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State Guides to Credit Card Laws
- North Carolina
- West Virginia