1 large balance vs. many small ones

Discussion in 'Credit Talk' started by gw, Oct 12, 2001.

  1. gw

    gw New Member


    I've read in several places that carrying high balances will reduce your credit rating. This makes sense since it affects both your debt/credit and balance/available limit ratios that are used by scoring systems.

    Most sources say that only your total ratio matters, but many imply that a high balance on a single card is negative. So which matters: the percentage of your total available credit or percentage of credit limit of each card?

    I am not maxing out my cards for bad reasons. My credit is solid and I always pay balances in full. However, paying in full is a waste with introductory rate cards.

    It makes financial sense to use as much of the low interest credit line as possible to pay balances on other cards or to prepay simple interest loans. Your bank account pays more than 0-2.9% these cards charge. It doesn't seem too financially smart to not take full advantage of a (next-to-)free 6 month loan.

    Unless it causes your creditors to think your debt is running out of control. It isn't in my case; I'll make payments when they are due, won't overcharge, etc., but I still need be sure.

    A related question is the affect of getting a new card every 6 months. I did some research and it indicated that as long as the new accounts are closed there shouldn't be a problem. Closed accounts typically don't matter too much and an extra inquiry every 6 months is irrelevant. I would definitely like to hear your thoughts on this; right now my only uncertainty is the high utilization on the intro card.

    Finally, it amazes me how difficult it is to gather quality information on these matters. I was pretty happy with finding this board...it seems that are many knowledgeable people here.

    I am really looking for an authoritative answers and information so if anyone has sources of good information I would be grateful.


    -G. W.
  2. roni

    roni Well-Known Member

    BOTH. Overall is weighted more, but individual accounts also lower score.

Share This Page