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Barrister
Barrister, Attorney
Category: General
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Experience:  16 years practicing attorney, Realtor, 26 years landlord
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I have a question about credit cards and credit limits. I currently

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I have a question about credit cards and credit limits. I currently have a "secured" card from Bank of America because I'm a student and have never used credit before. I have my own company and generate significant income and carry balances of over $15,000. My credit limit for my secured card is $500 and I was forced to charge $300 onto it over the weekend because B of A locked my debit card to prevent an attempted fraud charge. Is this going to hurt my credit, because my utilization is so high this month?
Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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Is this going to hurt my credit, because my utilization is so high this month?
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No, it shouldn't ding your credit because you are authorized under your credit agreement to charge up to $500 on the card. As long as you don't miss any payments, you can charge up to your limit and no negative entries will result on your credit report. Although carrying high balances on cards can serve to lower your credit score because it reflects a higher debt to income ratio, for this small a balance, it shouldn't have any impact.
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Barrister
Customer: replied 3 years ago.

So credit scores are not calculated based on credit utilization ratios, rather debt to income ratios?

So credit scores are not calculated based on credit utilization ratios, rather debt to income ratios?


They both factor into a person's credit score to some degree. That is what I meant when I mentioned that if you carry high balances on cards, it can affect your credit score. If you have $10,000 of available credit and you carry balances of $9500, then that increases your debt to income ratio and shows that you are utilizing most of your credit limit. This can serve to make you less attractive to other creditors and can factor into reducing your credit score. Creditors report both outstanding balances as well as credit limits and payment history so these all factor into a credit score.
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But for an amount this small, this shouldn't have any noticeable impact on your score.
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Thanks
Barrister
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