4. You Carry High Balances on Your Credit Cards
After payment history, the amount you owe is the second-most-important factor in your credit score, according to myFICO, the consumer division of FICO. Owing money doesn’t necessarily lower your score, but using a high percentage of your available credit can.
Remember that a high credit utilization ratio can hurt your credit score and make lenders think you’re a high-risk borrower. Consumers with the best credit scores use 10% or less of their available credit, Kelly said.
How to avoid it: “There is no absolute ‘right’ answer to how much of your credit limit you should be utilizing,” Pukas said. “What’s more important to note is that, if you’re carrying balances on credit cards that exceed 50 percent of the available credit, then you’re hurting your credit score.”
How to fix it: “Strive to get your total credit utilization under 50 percent first and then keep going,” Pukas said. “This is one of the fastest ways to increase your credit score.”
