It has always been known that maintaining manageable credit balances is one of the keys to financial health. Paying off credit card balances in full each month is ideal but when this is just not possible and a balance must be maintained, it is important to keep your credit card balance in relation to your high credit limit as low as possible.
Why?
Because this ratio of balance to high credit limit is known as the Credit Utilization Ratio. As this ratio climbs, credit score can be negatively effected. Many credit score pundits and even those within the credit bureaus recommending keeping this ratioless than 33%. Therefore, if the high credit limit on your credit card is $6000, try to keep this balance below $2000. A high Credit Utilization Ratio can damper those credit scores.
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