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LearnFAQDebt Management

How much does carrying a high credit card balance actually lower my credit score?

Answer

A lot, and quickly, because credit utilization is roughly 30 percent of your FICO score. Utilization is your reported balance divided by your credit limit; keeping it under 30 percent is the common rule, but people with the highest scores usually stay under 10 percent. Unlike late payments, utilization has no memory: it's a snapshot, so paying the balance down before the statement closes can lift your score within one billing cycle. Maxed-out cards can drag your score down by dozens of points. Both your per-card and overall utilization matter. See how paydowns move your number with the Credit Score Simulator at wealthserene.com/tools/credit-score-simulator or optimize balances with the Utilization Optimizer at wealthserene.com/tools/utilization-optimizer.

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