How is credit score affected if you carry a big debt on your credit card? What if you paid it off after 3 yrs?

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Take into consideration that the minimum (and more) was always paid off in a timely fashion each month with never any late penalties.

3 Comments
  1. Reply
    Mike
    July 17, 2011 at 8:24 pm

    Your credit score includes calculations to calculate your debt to line of credit percentage (credit cards). If this percentage get higher, your credit score decreases but will only be an issue if you try to make a loan or apply for more credit cards while the debt is outstanding. Therefore it won’t have any effect in 3 years if the debt is paid off since your credit score will return to normal.

    Example:

    Credit score is 750 with no credit card debt
    Credit score could possibly drop to 650 with debt percentage of 80%.
    As the debt is paid off, your credit score will increase and will eventually be back to 750 when the debt is paid off.

  2. Reply
    Katherine W
    July 17, 2011 at 8:52 pm

    If you’re always paying it on time, your credit score should be good. They do take into account the percentage of the maximum that you owe. So, if your card has a maximum of $ 10,000, for example, and you get it down below 50%, your score improves. Then it improves again when you’re below 30% and 20%. Every payment you make helps, especially when you pay more than the minimum.

  3. Reply
    LUKE
    July 17, 2011 at 9:08 pm

    Carrying big debt on a cc always affects your credit rating, but is not nearly as bad as if you made a late pay. As you paid it down, it would be less of a negative.

    The thing you need to think about though, is that the people with the highest credit scores rarely if ever carry a balance on a credit card. It’s a sign that you cannot delay pleasure.

    Pay off that credit card ASAP with big massive payments, then build up a big balance in a money market account with those same big massive payments.

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