I have a few TLs that have a "High Balance" that is greater than my CL. Does anyone know if this is factored into the FICO score as a negative behavior? This condition exists for some of my open accounts and some of my closed accounts. [edit] "High Balance" is not "Current Balance."
definitely! 30% of your fico score is based on your current debt ratio. if you're using all your available credit, this ratio is high and lowers your credit score. reason being, the more debt you have, the less likely you are to pay off new debt! my own rule of thumb is to never have a balance of more than 50% of my credit line.
But what about if the "high balance" was from 3 years ago, and the current balance is much less? Does that still factor negatively? Jenna
I have the same question. I have an MBNA card that went over my limit a couple of years ago. On my report is says "Credit limit $6500" but it also shows "High balance $6710". It has never come close to that amount since then, but that is what is on my report. Is the fact that I once charged over the limit factored into my credit score? I believe this is what SQUEEK was referring too.
Since FICO would have no way to know if high balance above CL is due to charging over your CL, or to a reduction of CL, I doubt if it directly affects your scores. It does look at balance to CL, but if CL is not reported (such as is done by CapOne), I think it uses high balance in place of CL.
In The ABCs of Getting Out of Debt, Garrett Sutton, Esq. states that since not reporting a credit limit screws with the debt-available credit ratio, you should complain to the credit grantor and the FTC. But what you said about using the high balance in place of the CL makes sense.
