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Balances
BALANCES = 30% of your Credit Score (877) 254-6900
The Balances on your accounts affect 30% of your credit score. That means the balances on your accounts influences 150 points of your credit score. That's a lot of redit score points. Sometimes making small adjustments to the balances on your accounts can swing your credit score upwards in a huge way and very quickly. You can also waste a bunch of money by paying down your car loan and not see a single digit increase in your credit scores. I'll tell you why, it doesn't really matter what the balances are on your installment loans as long as they aren't upside down or past due (in this case upside down means you owe more money for the car than you actually borrowed). Most of this 255 points is influenced by the balances on your revolving accounts. Revolving accounts are credit cards, department store charge cards or any type of account that gives you a credit limit. You say you don't have any of those types of accounts? Well that is another issue entirely. Regardless, it is important to know that if the balance on your revolving account exceeds 50% of the credit limit, your credit scores will drop. The scores might drop by about 7-15 points for each accounts balance that exceeds 50% of the credit limit. Of course that amount will be relative to what's in your credit report. Having revolving balances that exceed 50% of the score is bad, revolving account balances less than 50% of the limit is good, revolving balances below 35% of the limit is better and revolving balances that are zero are the best.
Revolving balance above 100% of the limit = Terrible
Revolving balance above 50% of the limit = Bad
Revolving balance below 50% of the limit = Good
Revolving balance below 35% of the limit = Better
Revolving balance at zero = Best***
***Having a zero balance on an account can actually hurt your credit score in some cases. If you pay your balance down to zero and stop using the account, the account can go inactive. The FICO scoring system doesn't give you points based on inactive accounts so allowing your account to go inactive will cause the points from that account to disappear. A zero balance on your revolving accounts is great as long as you don't allow your account to go inactive. You must use your accounts at least few times per year to keep them fresh and actively reporting new information to your credit report.
Having a zero balance on an installment account is bad for your credit score because if your installment loan has a zero balance, that loan is done and closed. Closed accounts don't contribute toward your scores so zero balance on your installment account hurts your scores.
Thank you for reading about how FICO considers the Balances on your accounts.
The Balances on your accounts affect 30% of your credit score. That means the balances on your accounts influences 150 points of your credit score. That's a lot of redit score points. Sometimes making small adjustments to the balances on your accounts can swing your credit score upwards in a huge way and very quickly. You can also waste a bunch of money by paying down your car loan and not see a single digit increase in your credit scores. I'll tell you why, it doesn't really matter what the balances are on your installment loans as long as they aren't upside down or past due (in this case upside down means you owe more money for the car than you actually borrowed). Most of this 255 points is influenced by the balances on your revolving accounts. Revolving accounts are credit cards, department store charge cards or any type of account that gives you a credit limit. You say you don't have any of those types of accounts? Well that is another issue entirely. Regardless, it is important to know that if the balance on your revolving account exceeds 50% of the credit limit, your credit scores will drop. The scores might drop by about 7-15 points for each accounts balance that exceeds 50% of the credit limit. Of course that amount will be relative to what's in your credit report. Having revolving balances that exceed 50% of the score is bad, revolving account balances less than 50% of the limit is good, revolving balances below 35% of the limit is better and revolving balances that are zero are the best.
Revolving balance above 100% of the limit = Terrible
Revolving balance above 50% of the limit = Bad
Revolving balance below 50% of the limit = Good
Revolving balance below 35% of the limit = Better
Revolving balance at zero = Best***
***Having a zero balance on an account can actually hurt your credit score in some cases. If you pay your balance down to zero and stop using the account, the account can go inactive. The FICO scoring system doesn't give you points based on inactive accounts so allowing your account to go inactive will cause the points from that account to disappear. A zero balance on your revolving accounts is great as long as you don't allow your account to go inactive. You must use your accounts at least few times per year to keep them fresh and actively reporting new information to your credit report. Having a zero balance on an installment account is bad for your credit score because if your installment loan has a zero balance, that loan is done and closed. Closed accounts don't contribute toward your scores so zero balance on your installment account hurts your scores.
Thank you for reading about how FICO considers the Balances on your accounts.
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