How Are Credit Scores Calculated Part 2 Of 6

How Much Is Owed:

The credit bureaus look at the total amount owed on all accounts compared to the total credit limit as well as how much you owe on different types of accounts (mortgage, auto, etc.). Using a higher percentage of the credit limit will cause concern with the lender / creditor and hurt your credit score. Individuals who max out their credit limits have a much greater risk of default.

For good measure, try to keep revolving credit balances at 30% or less of the credit limit. This will boost scores. Let’s say the balance on a revolving account has reached 79% of the credit limit and you have never missed a payment. The bureau computers will read this account as “Maxed Out” and your score will drop. Paying down the balance will cause the score to improve.

Part 3 of 6 will follow in the near future

For questions, contact Bill Spragg at , 281 804 3333 or Harry Bradley at , 713 419 7151


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