 Dear
Dr. Don,
My husband told me that he heard on a radio talk show that you should never "max-out" your credit card. He said you should always only use about 30 percent, otherwise anything more than that will negatively affect your credit score. Is this true?
-- Bee Balances
 Dear
Bee,
Yes, he's right, but there's a lot more to a credit
score than just this one measure. What your husband
is referring to is a measure of credit usage.
It considers the ratio of outstanding balances
to available credit on your credit cards. If you
have three credit cards with total lines of $10,000
then he's suggesting that you don't have more
than $3,000 in balances on each one of these cards.
Your credit score is based on the
information in your credit report. The graphic
below, from the myFICO.com Web site, illustrates
the weightings.
I recommend that you don't spend
a lot of time trying to micromanage your credit
score. If you use credit responsibly, pay your bills
on time and don't max out your credit cards,
you'll be fine. When you know you're going to
need to apply for credit, try to make sure you
put your best foot forward by having a clean credit
report and a solid credit score, but don't spend
your days worrying about whether you have 30 percent
or 40 percent in credit usage.
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