Is it bad for your credit if you max out your line of credit?

4 Comments

1. Eric says:

   November 2, 2011 at 1:50 pm

   It will hurt your credit. The lower you keep it the better, but the higher it is the more it will impact your score.
2. Joseph the Second says:

   November 2, 2011 at 2:21 pm

   Yes. Because THEN You end up with a Big Credit Card Bill every Month, & no more Credit to Buy anything With !!
3. General Knowledge says:

   November 2, 2011 at 2:29 pm

   No there is absolutely no problem if you max out your credit line. So if for example you are granted a £20,000 loan by your bank it is no problem if you reach that limit several times.

   What is bad however is if you exceed it (even by a few hundred pounds) or if you are unable to pay interest on that loan amount because both of those events will trigger a bad credit report.
4. likepepsi says:

   November 2, 2011 at 2:52 pm

   Part of your credit score is based on the percentage of credit you are using, and it is calculated for all your credit lines combined, and for each credit line individually. The higher your utilization, the more it hurts your score, but remember that it only hurts your score while the balances are high.

   The formulas are secret, but it is generally understood that your score takes a small hit when you are using in the area of 10%-30%, a bigger hit at 30%-50%, a bigger hit at 50%-80% and a bigger hit over 80%.

   For people with very high scores, the impact of high utilization doesn’t really hurt them – they can afford to take a large hit as their score will still be high. For people with marginal credit, it matters more.