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Does carrying a balance affect internal scoring?

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1LostArk
Regular Contributor

Does carrying a balance affect internal scoring?

I have personal and business accounts with Chase and Amex. Suppose that I max out one of my business cards on business expenses, and carry the balance. Meanwhile, all my personal accounts continue to report PIF. Would this risk AA or affect my internal scoring with the lenders?



Business Cards:
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SouthJamaica
Mega Contributor

Re: Does carrying a balance affect internal scoring?


@1LostArk wrote:

I have personal and business accounts with Chase and Amex. Suppose that I max out one of my business cards on business expenses, and carry the balance. Meanwhile, all my personal accounts continue to report PIF. Would this risk AA or affect my internal scoring with the lenders?


Yes it would.


Total revolving limits 657200 (536700 reporting) FICO 8: EQ 712 TU 710 EX 708

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JoeRockhead
Senior Contributor

Re: Does carrying a balance affect internal scoring?

There's nothing wrong with taking advantage of a 0% credit line/offer available to you to benefit your business. It's going to affect you in the same way it would on the personal side if you were to max out one of your credit cards there. Your business scores will drop for carrying the large balance but the key to avoiding AA not only with the issuer of the card as well as others (since anyone can pull your biz CRs any time) would be to pay well beyond the minimum due and get the balance down to better tiers. The usage % tiers on business TLs are very similar to consumer tiers 0-9, 10-29, 30-49, 50-69, 70-89, 90 and above.

 

I know you asked about internal scoring but there's really no way to know how much it will affect you as it greatly depends on your relationship and history with that lender. How new you are to them, what your history and spending tendencies have been, so on and so forth. If you go to 90%+ on one card it's going to throw up a red flag and they'll be watching for anything else that might elevate their concerns so keeping your personal side clean (low balances) is a good strategy to avoid further scrutiny. However, I'd recommend the first payment be at least 10x the minimum due (20x would be even better). This can be reduced as your balance passes into the next lowest tier, but showing them you're making a meaningful effort to reduce the balance will be beneficial to avoiding any continued concerns or AA. YMMV but the faster you pay it off may even result in an auto CLI as you're showing them you can manage your finances well and/or have the cash flow to handle a higher limit.

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