Sep
01
2010

Meaning of “proportion of balances to high credit on revolving accounts”

Dear Experian,

Can you explain one of the factors for my credit score? The listed factor is “Proportion of balances to high credit on bank revolving or all revolving accounts.”

- RNO

 

Dear RNO,

The statement refers to your overall utilization rate and means that that the balances on your credit cards are too high.

Your utilization rate simply compares your overall balances on your credit cards to their overall credit limits. Utilization rate is the second most important factor in credit scoring only behind late payments. The utilization rate usually accounts for about 30 percent of the total credit score.

Knowing that your utilization rate is too high, you can now get a copy of your credit report and identify the accounts with balances closest to the credit limit. Reducing those balances will improve your utilization rate over time, which should result in improved credit scores.

Thanks for asking.

- The “Ask Experian” team

Our policies for Ask Experian:

The information contained in Ask Experian is for educational purposes only and is not legal advice. You should consult your own attorney or seek specific advice from a legal professional regarding your particular situation. Please understand that Experian policies change over time. Posts reflect Experian policy at the time of writing. While maintained for your information, archived posts may not reflect current Experian policy. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team will include it in a future post.