 TITLE: How to Get Your Credit Ready to Buy a Car CONTENT: 3\\. Focus on Paying Down Credit Card Debt\n-----------------------------------------\nWhile you're getting ready to apply for a car loan, be careful not to take on any new debt. If you have existing credit card debt, reducing it can improve your credit score by lowering your credit utilization ratio. Your credit utilization ratio is a measure of how much of the available credit on your credit cards you're actually using; it's the second most important factor in your credit scores behind only payment history.\nTo calculate your credit utilization ratio, compare the total limits on your credit accounts to the balances. Lenders typically like to see a credit utilization ratio of 30% or less. For example, if your total available credit is $12,000, carrying a balance of $5,000 (41% of the available credit) could start to do damage to your scores. The balance-to-limit ratio on individual cards is important, too, even if high credit utilization on one card is offset by low utilization on the others.\nHigh credit utilization raises the level of risk you present in the eyes of lenders, which might make them more wary of taking you on as a borrower. Reducing your credit utilization will also lower your debt-to-income ratio (DTI), which compares your monthly gross income with your total recurring monthly debt. Lenders look at DTI to decide if you'd be able to afford monthly payments on a loan or credit card. END