How to Improve Your Balance-to-Limit Ratio

THESE 3 TIPS CAN IMPROVE YOUR CREDIT SCORE BY UP TO 30%

Your balance-to-limit ratio looks at the balance you owe vs. your available credit lines. This has a 30% impact on your score. Keeping your credit balances below 50% of your available limit is very important. Keeping your balances below 30% of your available credit is even better.

For instance, if you owe $10,000, and you have $100,000 of credit available to you, you are only using 10% of your available credit line. On the other hand, if you owe $10,000 and you only have $10,000 available to you, you have “maxed out” your available credit and your credit scores will be very negatively impacted. Therefore, it is not how much you owe, but how much you owe compared to what you are able to borrow.

Here are three practical steps to improve your credit score in this area:

1. DON’T CLOSE YOUR CREDIT ACCOUNTS.
Don’t close your credit accounts unless it is necessary to do so. It is better to have many open accounts with little or no balance than to have just one or two accounts regardless of the balance.