Will this increase my credit score.

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LT

Joined: 30 Jan 2009
LT's page
Posts: 64

2178 Magic Points

Subject: Will this increase my credit score.

Sat Jun 06, 2009 6:32 pm

Will a credit card with a $5000 credit limit and a balance of $3000 with no late payments for over a year improve a credit score?

Sven
Guest

Sun Jun 07, 2009 1:15 am

If you want the maximim score you need to pay it off. Anything above 95% lowers your score.

Sven
Guest

Sun Jun 07, 2009 1:16 am

Sorry, that was kinda unclear. I mean that you should not use more than 90-95% of the limit.

rachael

Joined: 11 May 2009
rachael's page
Posts: 244

6581 Magic Points

Mon Jun 08, 2009 9:25 am

Hi LT,

The amount of debt you owe contributes about 30%, when calculating your credit score. You should keep your credit card utilization ratio at 35%, even if you make timely payments. The reason being that by the time you pay off the balance(and the account shows $0 balance), may be the creditor has already reported to the credit bureaus. On your credit report the same account may show a remaining balance of $ 3000.

This is because you will not know, when your creditor is going to report to the bureaus. If he reports before you have paid off, the credit card utilization ratio will be reported as high. A higher credit utilization ratio will lower your credit score.
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Looking forward to a debt-free life.

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