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What Would Happen if I Max Out My Credit Cards?

Is it Worse to Max Out Your Credit Cards or Pay Late?

A while back we were playing with a credit score simulator on CreditKarma.com and found some interesting things regarding maxing out credit cards versus paying a credit card late.

What Happens to My Credit Score if I Miss a Credit Card Payment?

First, we did a simulation of “if I were to pay EVERY account on my credit report late by 1 month” and the results are below:

Ouch…160 points lost in 1 single month.  Honestly, not as bad as we were expecting. Don’t get me wrong, 160 points is a big drop, but we honestly expected to see worse results for being late on EVERY account on our credit report.

What Happens if I Max Out All My Credit Cards?

Now, we ran the simulator for a comparison to see what would happen if, instead of going late, we maxed out all our credit cards to 100% utilization….drum roll……

max out credit cards

DOWN 271 POINTS!!!!!!!!!  Obviously maxing out credit cards is far worse than paying late in terms of the negative results to your credit score.  However, you must keep in mind that the late payments are going to negatively affect your credit score for several years, whereas the maxed-out cards, once paid down, will be like they never existed to the credit scoring model.

What Happens When you Carry a Balance on Your Credit Cards at Different Levels?

The reason for this experiment was really to see what maxing out cards can do to a score.

We decided to see what effect the utilization ratio has on the credit score at 10% intervals.  We did 90%, 80, 70… all the way to 5% and the results are VERY interesting! Take a look:

  • 90% = down 235 points… going from 100% to 90% increased the score 36 points:
  • 80% = down 167 points…dropping it down to just 80% was 104 points difference versus 100% utilization:
  • 70% = down 163 points…4 point gain
  • 60% = down 160 points…3 point gain
  • 50% = down 152 points…8 point gain
  • 40% = down 93 points…turns out that dropping below 50% is a real big turning point.
  • 30% = down 82 points
  • 20% = down 69 points
  • 10% = down 32 points
  • 5% = down 7 points

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If you are tired of paying higher interest rates and are ready to see what life is like with good credit. Check out the credit tradelines simulator designed to help you select the tradelines for your or contact one of the highly trained credit specialists at BoostMyScore today at 1-800-531-1472.

Bill Airy

About the Author:

Bill Airy is the CEO and Founder of BoostMyScore. For over 12 years he has helped American consumers get a second chance at a better financial life by helping them to improve their credit score. He regularly publishes helpful content on this Blog to educate others about Credit Scores and best practices when trying to improve them.

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BoostMyScore Team