How Revolving Balance Affects a Credit Score

Reader Question: How much could revolving balance affect a credit score?

Revolving accounts can affect scores in many ways. If you have too many of them, it can have a negative affect on your credit score. Also, 30% of your score is based on the amounts you owe across all of your accounts. So, if the balances are near the card limits, this will have a negative affect as well.

Keeping your balances low on revolving credit and other accounts can help you maintain a good credit score. This cannot be stressed enough. If you do this, and if you make all of your bill payments on time, you'll be in great shape. But when the balance of your revolving accounts gets too high, it's going to have a negative impact.

Another thing most people don't realize is that if you only have revolving accounts, your score could be lower. Your mix of credit (meaning a good balance of installment loans, revolving accounts, retail accounts and mortgage loans) accounts for 10% of your credit score.

While it is hard to determine exactly how much revolving account balances will negatively impact your credit score, it is important to understand the components of your score and how each applies to you personally. That way you will know what steps to take to improve your credit (if necessary).