Establishing Credit Card Gaps

Credit scoring models put a lot of emphasis on how credit cards are handled. The main thing the scoring model wants to see in this area is a “gap” between the balance owed on a credit card and the credit limit. The scoring model will take serious points off if a balance is over 70% of the card’s limit. Likewise, the model will add major points if the balance is under 30%. Keep credit card gaps as low as possible to boost a credit score.

Also, when paying down credit card debt, one should always start with the accounts that are closest to limits to get the maximum boost to the credit score. Also, don’t ever ask a creditor to lower a limit on an account. The higher the limit, the better for the score. Lastly, carrying smaller balances on several cards is generally better than having one large balance on one card.

October 10, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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