Question : Is it bad to have a credit card balance that is always close to the limit?
I have only one credit card, and it is the only credit card I have ever had. I am a college student. The card has 17% APR.I have a credit limit of $1000 dollars, and I tend to only pay $100 dollars a month, and then spend again on it. So I'm always very close to the limit. Someone recently told me that this is bad for my credit. Is that true?
- asked by kalokerikoritsi
All Answers:
Answer #1
Yes, this is bad for your credit score. 30% ofyour credit score is based on your"Debt-to-credit-limit ratio." If that ratio ishigh, then your score will go down, quite abit.The best thing, as far as your score isconcerned, is to keep your balance under 25% ofyour total credit limit.
- answered by Stephanie C
Answer #2
very very bad.
- answered by a nono mous
Answer #3
Yes, your credit score is suffering from it, andyes your finances are suffering from it.You arepaying $170 a year for the privilege of borrowingand paying back $100 a month. That is costing youbig.Also, anytime you utilize more than 30% ofyour credit limits, you will reduce your creditscore. As your balance approaches the creditlimit, then it really reduces your scoretremendously.Suck it up for a month or two and payoff a larger amount. To avoid using the card, lockit in a drawer instead of carrying it. You willpay it off.
- answered by stopccdebt
Answer #4
Unfortunately, yes. It is bad for your FICO scorebecause it shows you are using all the creditavailable to you. Plus, with your payment historyand the interest rate on that card you will bepaying on that card forever. It would almost bebetter to have 10 cards with $1000 limits and only$100 on each card (but that wouldn't be realisticbecause you would have to break up your monthlypayments 10 different ways).
- answered by RLW
Answer #5
Yes, this is how your score keeps getting lower.Your using almost all of your credit line whichtells your creditors your close to beingoverextended!Look into the website below. This isa great one for learning how to clean up andrepair your credit. If most knew how creditoperates in the first place, there wouldn't be somuch need to repair credit. Get a subscription toa credit monitoring service. This way you can seewhat your doing to your credit directly, good orbad. I got my score up to 720 from 485 with helpfrom this site. Get the RSS feed too since newinfo gets added all the time!You will find thesection "how credit scoring works" section reallyhelpful.
- answered by Duane B
Answer #6
It builds up gradually based upon how well youmanage your loans and financial situation.However, the credit score can degrade at quite arapid rate if there are consistent defaults onloan and credit card bill repayments. Repairingthe credit score is not that difficult providedyou take these 5 simple steps intoconsideration.1. Check your credit reportregularlyThis is a must to ensure that you knowyour current credit score, and what is ailing it.If there are any inconsistencies in your creditreport get them corrected. Keeping bills of allthe transactions you make can be very handy andhelpful in correcting any errors in your creditreport.2. Get rid of those extra credit cardsThetemptations to own a new credit card are sonumerous in modern times that many of us end upwith a purse-full of them without any real need.They stay there and cause a lot of problems inrepayment. The confusion that comes with too manycredit cards can easy lead to a missed payment andresulting penalties. Frequent defaults willreflect poorly on your credit score. So, keep onlythe necessary and discard the rest.3. Repay ontimeEvery credit card transaction is a loan thathas to be repaid on time with interest. Don't evermiss out on any repayment. If you are not able tomake full payments, make half, or even the monthlyminimum, but don't default. This will keep you inthe good books of credit card company and helpyour credit score. If you are not able to payanything to the credit card company, don't shyaway from them, call them, explain your problemand work out things so that a negative reportdoesn't land up with the credit reportingagencies. Read more from:
http://www.credit-card-gallery.com/article/239,Credit_score_repair_in_5_simple_steps
- answered by abby fth
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