Ratio of Revolving Account Balances to Revolving Credit Lines

Revolving accounts are accounts that allow you to spend up to a specified limit at any given time so long as you make regular payments, like a credit card or home equity line of credit. So, if you have $15,000 credit card limit and your account balance is $14,000, if you make a payment of $1,000, you end up with $2,000 of available credit not including interest.

Credit Utilization

Your ratio of revolving account balances to revolving credit lines is also known as your credit utilization rate. This ratio is a prominent element in the calculation of your credit score, accounting for about 30 percent of your credit score. The lower your credit utilization ratio, the higher your credit score.

Total Balance

When figuring the ratio of your account balances to your revolving credit lines, several calculations are made. First, the total of your accounts is added up. As such, transferring all or part of one account balance to another will not really make a difference unless you are close to maxing out an account.

Separate Credit Accounts

In addition to being calculated in terms of the total balance of your revolving accounts compared to your total revolving credit line, your credit utilization rate is also calculated with regard to your separate accounts. If you are nearly maxed out on a credit card or have spent almost the entirety of a line of credit, your credit score will be lower than if your credit balance was spread over several accounts.

Number of Accounts

The number of accounts you have figures prominently in your ratio of revolving account balances to revolving credit lines. For this reason, keeping unused credit cards open can be a good way to maintain a higher credit score. Were you to close those accounts, you would reduce the number of accounts you have and lower your average credit utilization. Moreover, if you are close to maxing out your credit cards, opening an additional account can improve your average credit utilization.