Q&A: Will Carrying a Balance for a Short Time Hurt My Credit Score?

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Question: I usually pay my credit card bill in full every month. But the next bill is going to be very big and paying the whole amount will be hard. Will it affect my credit score if I only pay part of the balance this month? And does it matter how much the partial payment is? - Steve

Answer: Steve, this is a great question! It's awesome that you're so responsible with your credit cards. But life can be unpredictable and sometimes it's difficult to pay your balance in full every single time. The answer to your question requires a tiny bit of simple math.

The first thing you need to do is to calculate your credit utilization ratio. Don't worry! This isn't as painful as it sounds.

The FICO score looks at your utilization ratio on each card and on your cards overall. To determine your ratio, divide the amount of credit you've used by the amount of credit you have available. For example, let's say you have two credit cards and they each have a $2,000 limit. This means your available credit is $4,000.

Okay, now we'll pretend you've charged $1,000 on one card (you plan to carry a balance on this one) and $200 on the other one. This gives you a 50 percent ratio on one card (1,000 / 2,000 = .50, or 50 percent) and a 10 percent ratio on the other one (200 / 2,000 = .10, or 10 percent).

Your credit utilization ratio (on individual cards as well as overall) should be no higher than 30 percent, and preferably closer to 10 percent. You're doing fine with the second card because you have a 10 percent ratio.

But on the first card, your 50 percent ratio is high and could cause a ding to your score. You say you only plan to carry a balance for a short time and that's key. Pay the balance off as soon as you can, and unless you make late payments or commit some other credit faux pas, your score should bounce back pretty quickly.

In this case, your overall credit utilization ratio is 30 percent (1,200 / 4,000 = .30, or 30 percent). This is good, but you don't want it any higher than this. But you do have a high ratio on one of your cards and that can still cause a drop in your score.

You can limit the damage – or even prevent it – by making a partial payment that's high enough to bring your ratio to under 30 percent. A little quick math shows us that making a payment of $600 gets the ratio on this card down to 30 percent. A payment of $600 leaves you with a balance of $400 on that card. The new ratio: 400 / 2,000 = .30, or 30 percent.

See how that works? A $600 payment might be a stretch, but get as close to it as you can.

Now, if you plan to refinance your mortgage or apply for any other type of credit within the next three to four months, this might be an issue. You want your score as high as possible before you apply so you get the best terms. But if this isn't an issue at this time, I wouldn't worry about a temporary drop.

You can monitor changes and get an idea of your overall credit health by using LendingTree's free credit score. It doesn't hurt your score at all to use this fabulous free credit tool.

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