High Balances and Credit Scores

Q: If I want to help my credit score should I pay off all my credit card balances & my car loan?  I heard high balances on credit hurt scores?

A:  This is an excellent question. Many individuals get confused when it comes to high balances on different types of credit & the impact they have on credit scores. High balances drop scores most when they are on “revolving credit” accounts. Revolving credit is credit cards, overdraft on a checking account, and some lines of credit. Hi debt on car loans, student loans, and mortgages has less of an impact on credit scores than revolving credit balances do. Paying the revolving credit balances down as low as possible is the best step to take when trying to improve credit through balance reduction.

 

Filed Under: Credit