Question

Your credit card debt to limit ratio has a huge impact on your FICA score (30%). It should always be kept below 15%. If your card has a limit of $3,000 and your credit card debt has reached it, what payment will you need to apply to your balance to pay it down to 15%?

Answer 1

The amount of payment that needs to be applied to the debt balance to bring the debt to limit ratio to 15% is $2,250

Explanation:

Here we have the card limit as $3,000

The card debit to limit ratio should be kept below 15%

Therefore, card limit of $3,000 = 100%

The protect FICA score card debt to limit ratio required required is 15% that is;

Maximum appropriate card debt is 15% of Max allowable card debt

Maximum appropriate card debt = 15% of $3,000 = $450.00

Current debt on card = $3,000

Payment to be applied to the balance to pay it down to 15% is given by

`\$3,000 - (15)/(100) * \$3000 = \$3,000 - \$450 = \$2550`

Therefore a $2,550 payment will be applied to the balance to pay it down to 15%.