Exceeding Your Credit Limits

Avoid Exceeding or Even Reaching Credit Limits

The sections of your credit report that detail "Amounts Owed" accounts for 30% of your overall FICO credit score. These figures include loans, credit card balances, and money owed for services rendered (medical, dental, etc.). In the case of a loan, the amount owed is shown in relation to the original amount borrowed. In credit card cases, this figure is represented by the amount owed in relationship to the total available credit.

Some credit information experts claim that any amount on a credit card that exceeds 35% of the available limit can have a negative affect on your credit score. The theory behind this practice is that someone close to or actually "maxing-out" their credit card balances may not have the funds to make the payments in the future.

This process is known as "over utilization" of available credit resources. Credit agencies look at your aggregate credit balances and limits across all of your debts when calculating this percentage. For that reason, leaving credit accounts with zero balances open can improve your situation.

Closing accounts that have zero balances in good standing also will not raise your credit score. Industry experts cite that the credit history for accounts in good standing can benefit your overall credit score. The best expert advice is to keep credit card balances low and keep paid off cards in good standing open.