The more owed relative to the credit card limit (cap), the lower a FICO score. And there are cutoffs or segments, meaning that within certain ranges of a balance percentage there's no effect, and then a change when a balance hits a cutoff.
The cutoffs are as follows: 0–19 percent, 20–39 percent, 40–59 percent, 60–79 percent, 80–99 percent, and 100+ percent. Each increasing cutoff harms a score the same amount as the previous (e.g., if a balance goes from 39–40 percent, it will harm a score at the same rate as its going from 79–80 percent would). (Many "experts" claim 50 percent of the credit limit is a magic number. But as you can see, this is wrong.) Keep all balances on your revolving (credit card) accounts below 40 percent of the credit limit, and never exceed that amount. If possible, never exceed 19 percent.
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The last 12 months of payment history carries the most significant weight, so recent late payments are the worst. One recent late payment on a single account can lower a score by 15 to 40 points, and missing one payment cycle for all accounts in the same month can cause a score to tank by 150 points or more! This puts a score well below loan-eligibility range overnight. Those 150 points won't come back overnight, though, I assure you. Bills must be paid on time.
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