How long can I carry a balance before it negatively affects my credit score?

A balance all by itself is not as negative as carrying a balance that is more than 40% of your total available credit on the card. Your credit rating is most negatively affected once the balance you are carrying is greater than 70%.

In the event you have a sudden, expensive issue- car problems or books for the semester or even your spring break trip that cost way more than you thought, there are some ways to carry a balance without destroying your credit rating until. The best way to minimize the dent to your credit score is to split your balance over two cards to keep your ratio below the 40% threshold. This is definitely NOT a long term solution, but it is an option to reduce the impact of sudden expenses- or poorly planned fun.

Taking out a new credit card will also cause a negative impact to your credit rating but it is generally not as detrimental as a long term balance that is more than half your available credit limit. As you continue to use the card and pay down the balance you are building the history of the card. Carrying a balance on an existing card, sending in a payment or two late or going over the limit- these are huge red flags to the credit bureaus and ultimately lenders.

Another option if you can anticipate needing to carry a balance is to get a credit line increase ahead of time. One thing to also keep in mind besides trying to keep your balance to a minimum, is keeping your maximum credit line at a realistic amount that you could pay back. If you have a $10,000 credit limit, a lender is considering the minimum payment that would be necessary if you were extended the entire amount of the credit limit. They use this to calculate the amount of money you will have available to pay back the loan you may be applying for- a car loan for example. If your minimum payment would be $200 on a fully extended credit card, you have $200 less of your monthly income available.

The best way to maintain or improve your credit score is to keep your balances to a minimum and pay them off as quickly as possible. But just about everyone knows that things come up. It is important to manage your debt carefully or the impact on your credit score can end up being far more extensive with the inability to get the best interest rates on future loans.