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Old 02-21-2009, 08:13 AM
WJTrader WJTrader is offline
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Question How Credit Use Affects Your Score

are you wondering how you can improve your credit score? If so, it is important to understand, that one of the most important factors for calculating your credit score is your credit utilization.
In a nutshell, your credit utilization score is how much of your available line you have versus what your balance actually is. The closer you are to maxing out your credit card, the lower your FICO score will be. Experts say that this one factor accounts for about 30% of your credit score.
This makes perfect sense of course. Imagine that you have two friends looking to borrow some money. One of your friends currently owes 20 different people about $1,000 a piece. Your second friend does not owe anyone any money. Which friend are you more likely to loan money to? The answer is obvious.
It's the same way that lending institutions look at you. If you are constantly borrowing more money and maxing out your credit cards, they will be less likely to loan you more money. However, if you are able to keep your balances at or below about 30% of the available limit, then your scores will actually improve.
This is just one factor that is looked at. Other factors include your payment history, length of history, the types of loans you have, and other factors. So, if you are looking for a quick boost to your credit score; pay down your credit cards and your FICO will improve. In addition, if you have any late payments, see what you can do to get those removed.
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Old 06-15-2009, 10:02 AM
MarkHamilton MarkHamilton is offline
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Default Re: How Credit Use Affects Your Score

What your talking about is called debt to credit ratio. Although having everything paid off is also negative. This gives a person too much available credit and will hurt your score as well. Credit card lenders also would rather lend money to someone who uses their cards rather than someone who is going to keep a zero balance. Lenders have found that a person who makes a late payment now and then pays more money in late fees and higher interest which is were a large percentage of profits come from.



Mark

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