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How your credit limit affects your credit rating

Is it better to carry a higher balance on just one card?

I know it's better to have fewer cards with higher limits. But is it better to carry a higher balance on just one, while the others are at zero? Or is it better to spilt the debt between two?

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Bill's Answer
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Thank you for visiting Here is an answer to your Credit question on high balances and multiple cards.

First, it is important to understand how your credit score is calculated. Your credit rating is calculated based on several variables, including: your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history.

Therefore, if consolidating your lines of credit to one ends up maxing out your one utilized credit line, then it may hurt you. If, on the other hand, your credit utilization remains low, then it may benefit you (particularly if it lowers a different credit line which is maxed out, or high).

Similarly, if the accounts that you close have a long and good payment history, then you should probably keep them open. If they are short history accounts, or have poor payment history, then close them. Additionally, you will not want to close all of your lines... but you don't want too many open either - it's a judgment call based on all of these factors.

An additional consideration is the cash flow impact. You should start by paying off your highest interest accounts, and then work down to the lowest interest accounts, then this strategy may save you money.

If you would like more information, please visit our credit resource page at:

We hope that this helped you to Find, Learn, and Save!



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