If you have already applied for a Citibank credit card, you are probably on the track of rectifying your finances and avoiding all probable credit card debt in the future. You need to know that your balances and credit limits make for 30% of your FICO score. When you have a new credit card, you will eventually start buying new things with it. Now, any amount that you spend on this financial instrument is going to be added to your balance. This is the amount that you will owe to the credit card company.
Such a balance is also called credit card debt. Remember, if you have more than one credit card, the balance and credit limit of each one of them is going to be very important, especially when you are calculating your credit scores. If not taken care of on a regular basis, your balance and credit limit is going to have a negative effect on your credit score.
Is 30% Of My FICO Score Actually Based On The Amounts I Owe?
Yes, 30% of your FICO score will be based on the amount owed by you. It is a rather significant category of your credit report. Any lender / bank / financial institution is going to take this into consideration. They will also consider the following information in your credit card report:
How many accounts owned by you have any balances?
The balance on each of your accounts in comparison with the credit limit that they possess
The total balance across all your accounts in comparison with the total credit limit that they possess
Using Your Credit Limit On Your Citibank Credit Card Wisely
It is always advised that you use your Citibank credit card wisely. The leading credit scoring models are going to examine how much of your available credit is being used on each of your cards. They will also ascertain how much of your total credit limit is being utilized across all your cards. A certain percentage of the credit limit you are using will be calculated by the lender. This percentage is called your credit utilization ratio. Remember, if you are using a high percentage of your credit limit, it can be seen as a very risky behavior on your part.
Any bank / financial institution might think that you are over extending yourself financially and may eventually encounter some trouble when it comes to paying your bills at the end of the month. Do bear in mind that maxing out on your credit cards is going to have a dramatic negative effect on your credit scores. Therefore, always use your Citibank credit cards wisely.
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