Don’t Be Afraid of Revolving Debt: Here’s How to Use It to Your Advantage

 Revolving debt is a type of credit that allows you to borrow money up to a certain limit and pay it back over time. You can use it for various needs and emergencies, such as paying bills, buying groceries, or making a big purchase. 

Revolving debt can be flexible and convenient, but also risky and costly if you don’t manage it well. It can affect your credit score, your financial health, and your future borrowing options. Here are some tips on how to use revolving debt wisely and boost your credit score.

Pay your bills on time

Your payment history is among the most significant elements that determine your credit score. Paying your bills on time demonstrates your responsibility and dependability when using credit. Making late or missed payments can lower your credit score and result in charges and penalties.

To avoid missing or making late payments, you can set up automatic payments, reminders, or alerts. You can also pay more than the minimum amount or pay off your balance in full every month if you can afford it. This will reduce your interest charges and help you save money in the long run.

Keep your credit utilization low

Your credit utilization ratio is a crucial element that impacts your credit score. This represents the portion of your available credit that is being used right now. Your credit utilization ratio, for instance, would be 20% if you had a credit card with a $10,000 limit and a $2,000 balance.

Your credit score will benefit from a lower credit utilization ratio. An excessive reliance on credit and potential difficulty in repaying it are both indicated by a high credit utilization ratio. Maintaining a credit utilization ratio of under 30% for all of your revolving accounts is a good general rule.

To keep your credit utilization low, you can pay down your balances, request a higher credit limit, or use multiple cards for different purposes. You can also avoid maxing out your cards or closing unused accounts, as this can lower your available credit and increase your credit utilization ratio.

Use revolving debt for the right reasons

Revolving debt can be a useful tool for managing your cash flow and building your credit history. However, it can also be a trap for overspending and accumulating debt. Therefore, you should use revolving debt for the right reasons and avoid using it for unnecessary or frivolous expenses.

Some of the right reasons to use revolving debt include:

  • Making a large purchase that you can pay off over time

  • Taking advantage of rewards and benefits offered by some cards

  • Improving your credit mix by having different types of credit

  • Covering an emergency expense that you don’t have savings for

Some of the wrong reasons to use revolving debt include:

  • purchasing items that you do not need or can not afford

  • Paying for everyday expenses that you should budget for

  • Transferring balances from one card to another without paying them off

  • Withdrawing cash from an ATM using your card

Using revolving debt for the wrong reasons can lead to high interest charges, fees, and debt that can damage your credit score and financial health.

Monitor your credit report and score

Finally, you should monitor your credit report and score regularly to see how your revolving debt affects them. Your credit report contains information about your credit history, such as your accounts, balances, payments, inquiries, and disputes. Your credit score is a numerical representation of your creditworthiness based on the information in your credit report.

You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once every 12 months through You can also get a free estimate of your credit score from various websites or apps.

By monitoring your credit report and score, you can check for errors, fraud, or identity theft that may affect your credit. You can also track your progress and see what areas you need to improve on.


Revolving debt can be a powerful tool for achieving your financial goals if you use it wisely. You can raise your credit score and benefit from having good credit by paying your bills on time, limiting your credit utilization, using revolving debt responsibly, and keeping an eye on your credit report and score.

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