How Are Credit Scores Calculated Part 3 of 6

Utilization

When it comes to revolving credit cards, the formula looks at the difference between the high limit and the balance. Let’s say you have a MasterCard with a credit limit with $10,000 and you have a balance of $2,000 on it. That is a 20% utilization ratio. That is good. The lower the ratio, the higher the credit score. If you are looking for a quick credit score boost, pay down the balance on any accounts that you can.The score will not change instantly. It may take up to 45 days for the credit bureaus to update reports.

It is important to remember CLOSED ACCOUNTS do not help and can hurt if there is a balance remaining. Closed revolving accounts remove available credit and raise the utilization ratio – that is not good.

Part 4 of 6 will follow in the near future

Contact us: Bill Spragg at BSpragg@LcaNow.com , 281 804 3333 or Harry Bradley at HBradley@LcaNow.com , 713 419 7151

 

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