The second largest credit score component is called the “credit utilization ratio,” which means how much debt you owe in comparison to your total available credit. The general rule: The less, the better. Less is defined as around 10%.
If the available credit of ALL your credit cards is $15,000 and you carry a $1,500 balance regardless of your payment preferences, meaning you pay it off monthly or over time. As long as you have a balance when the credit card companies report it. Your utilization ratio is about 10 percent. This doesn’t negatively impact your score. If you close some of your accounts, the total available credit is reduced to $5,000. In this case, the $1,500 balance puts your utilization rate at 33 percent. This would hurt your score big time. That’s why it is not recommended to close credit card accounts.
Nobody’s perfect. Even when you spend all day trying to learn everything you can about a subject, you still make mistakes. For instance, even some of the top credit card experts have made some embarrassing moves, yet we were all willing to share them so that you can learn from our experiences.
Brian is the founder of The Points Guy, a website that teaches credit card users how best to earn and spend their credit card rewards. Here are some of his biggest mistakes:
I once missed out on a sign-up bonus because I thought the time to spend