The perfect balance to carry over your credit card

The balance you carry on your credit cards are very important to your credit score. In fact, about 30% of your credit score is made up your total credit card balances and individual balances on each card.

If you are someone who is consistently maxed out or close to your limit, your score will decrease because it appears you are more dependent on credit and the likelihood you will default soon is high. This is how lenders perceive you.

If you are someone who doesn’t use credit cards often or keeps a very low balance, your score will more than likely raise because you aren’t considered much of a credit risk since you don’t really depend on credit as much.

The perfect balance to carry on a credit card is 1-7% of your total credit limit.

In fact, FICO rewards consumers the most points possible (in the balance component of a score) who maintain a 1-7% usage rate.

For example, someone with a $1,000 credit limit and a $70 balance is very likely to have a higher credit score compared to someone with a $1,000 credit limit and a $950 balance.

We’ve made a short video for you to learn more about credit card balances and what kind of balances you should maintain each month.

If you have any questions, please call, text, or email us!