A high credit card balance relative to your credit limit will hurt your FICO scores. Ideally, you want your credit utilization ratio to be under 30%. That doesn't mean it's considered a derogatory item on your credit reports as long as you're making payments on time. It will hurt your scores though.
could our biz be rejected for a line of credit renewal because we have two cards close to limit? we are using personal guarantees of our partners though.
OK- you didn't mention that this was a business credit question. Biz credit is completely different from personal credit. However, I would assume that underwriters for your LOC will look at maxed out credit cards and have some concerns unless your business is generating good cash flow and simply choosing to invest the your capital elsewhere. On-time payments are certainly a good thing too.
when you mention biz credit is diff from personal...does that mean that they may be more lenient if we pay on time and have credit cards that are close to limits? we don't have any accts in collections, judgements, bankruptcies, etc.....
and is this something that could be a sole reason to deny us a line renewal? just on this item alone? or will they, since it's a business, look at everything else like our partner's assets and their own persoanl credit?
No, they should underwrite the whole business, look at your biz financials, and also take into consideration the financials and personal credit scores of the owners. They won't just deny you on the sole basis that the business has a few credit cards with high balances. Unlike personal credit cards, businesses are expected to use a larger portion of their available credit.
