How Are High Balance Credit Cards Bad For Credit?

Introduction

In the economy, in today's world people are more concerned about their credit score than they were 20 years ago. By having failing credit you may be denied vehicle loan, credit cards and even worse you could be denied a loan for you and your family to reside in!

By having high balance credit cards, you may be having to pay higher intrest rates than if your credit score was lower. You also may be hurting your financial future by carring so much debt on your shoulders.

What should my balance be?

When applying for a loan there are several things that the loan officer or loan company will look at. One of the most important that they look at is how "high risk" that you could potentially be to their company. By having high balance credit cards you are showing up as a higher risk to their company.

You should try to keep you credit card balance to a minimum. What your every available balance it, most creditors will not even consider you for a loan unless your balance is less than 70 percent of the available balance. If you balance is 30 percent or less, however you are more likely to be approved. This also depends on late history, how long you have had the cards for, how much you are trying to get approved for, and your total debt to income ratio as a whole.

 

 

Improve your credit

To try to get some credit cards balances paid down, there are a few things that you can do.

• First off you need to get the most current copy of your credit report from all 3 credit bureaus. Check all three reports for accuracy of information. This would include things such as name changes, addresses, balances, late payments and charge off's.
• Pay your current credit bills on time. By paying your credit card bills on time, you are showing other credit card companies that you are not a high risk and they will be more willing to accept you and offer you credit with their company.
• If you have an option to do any type of zero balance transfers, take advantages of this. You may have other credit cards with higher interest rates. By transferring balances you are"paying off" cards which appears to look better on your credit report thus helping your credit score to improve.
• Do not close any old credit cards or those that have a zero balance. By closing cards that you have held for a long time, you are essentially hurting yourself! This is because all lenders look at how long you have had establish credit that is still open. Also by having a card that has a zero balance with available credit showing, you look less risky to the lender or card companies.

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