The effects of credit cards on credit score

credit score

Credit score is the defining metric that banks and other credit providers use to determine whether to lend money or not. The significance of a credit card’s impact on your credit score can depend on the card issuer, the balance, job, income, assets, or even the country we are in. Digging into this, we will explore the credit card debts of average citizens to set a benchmark of credit scores in regards to credit card debt. 

Regardless of where we live, applying these simple rules help maintain a good credit score:

  1. Monitor your payment history
  2. Use credit wisely
  3. Increase the length of our credit history
  4. Limit the number of credit applications or credit checks
  5. Use different types of credit


Most sources agree that the average credit card debt of Americans in 2019 was $6,194, totalling at a record $930 billion. With an average interest rate of 14.52%, calculated by analysing popular cards from this comparator, the total credit card debt just from interest rate has passed $100 billion.

A critical factor in America is debt utilization. The utilization rate is less about how big the actual debt is. The amount of credit utilized is more important. In practice, this means that keeping $600 credit on three separate cards with a $2000 limit will serve you better than owning one of these cards at $1800 debt. While debt utilization is not the only factor impacting credit score, it still is a kind of loophole as long as we have a good organization to manage the accounts.


This Canadian comparator was used to determine an average interest rate of 19%, contributing to the average amount of credit card debt in Canada is $2,627 for a total of $80 Billion. Surprisingly, 39% do not understand the benefit of paying more than the minimum balance on their credit card or debit card.This means that $7 billion is owed in interest on credit card debts alone. An excellent tip to avoid interest is to clear the balance each month.

It is possible that recent changes to Canada’s credit system, which are changes to resemble the USA system, will make it easier to standardize the credit system and perhaps lead to a global credit score!


In Australia, the average amount of credit card debt in 2020 is $2733, with $22 billion total debt. We used this Australian comparison website to find data to establish the country’s average credit card interest rate was 16.88%.

A tip for building a good credit score is the ‘age of our credit file’, meaning it would be beneficial for the reader to take some low-risk credit (low amount credit card, for example) and make small, regular payments to build a good history. 

This will benefit your credit score for years to come as it provides evidence of management of credit, regular salary and ability to grow your creditworthiness if you don’t have any other debts.

An interesting note on Australia is that there has been a drop in the number of debit cards owned while credit cards continue to increase. There has been a year-on-year increase in the number of accounts. However, since 2015 the average balance has mostly decreased and not varied by more than $90, so it appears to be under control.

Wherever we live, our credit score can cost or save us a lot of money over our lifetime. An excellent credit score can lead to lower interest rates for any line of credit we take out. But it’s up to us, the borrower, to make sure our credit score remains strong to access better opportunities if we need to. 

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