High Credit Card Balance – “The Silent Score Killer”
Next to negative credit listings, high credit card balances (how much you owe) hammers your score most of all. If you get your balances in check, your score will probably go way up.
* The credit score is a funky, fickle beast that no one can quite control. The methods contained will work to improve the credit score in most cases but could actually hurt it in others. Sorry we can’t be more exact, but like we said: The super-smart computers can be pretty dim-witted sometimes.
A really bad idea that everyone will tell you to do: When your score’s down, many “experts” will tell you to close a bunch of accounts. DON’T DO IT unless you have lots of cards (over four) and zero balances on all of them. Closing accounts shrinks your overall credit limit and increases your debt-to-limit ratio (thats really bad).
Debt-To-Limit Ratio: How much you owe compared to the credit card’s limit. If you have a $5,000 limit card that you owe $2500 on, thats a 50% debt-to-limit ratio. Add up all your limits on all your balances and divide your total balance by your total limit and that’s your overall debt-to-limit ratio. The lower the overall ratio, the better the score.
TOTAL BALANCE / TOTAL LIMIT=DEBT-TO-LIMIT