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Rules of the credit scoring game

By: 12 November 2011 3 Comments

It’s hard to play a game if you don’t know the rules. Imagine suddenly having to play a game you’ve never played before – perhaps rugby, polo, or cricket.. What would you do? You could try to make the best of it, but invariably you would make a lot of mistakes along the way simply because you don’t know what you’re supposed to be doing..

Many consumers use credit but don’t know much about credit scoring and how the scoring game is played. As a result, people often make the wrong decisions, which can devastate a credit score and result in a lot of money going down the drain due to higher interest rates. A higher interest rate could cost you thousands of dollars more on a car loan and a hundred thousand dollars or more on a home loan, simply due to your credit score.

“Some rules of the credit scoring game are fairly obvious, such as making a late payment will greatly hurt your score,” said Mark Foster, Director of Education for Credit Counseling of Arkansas (CCOA). “But other rules of the game aren’t obvious at all.”

CCOA provides this information on some of the lesser known, but vital, credit scoring factors:

* Owing half of your credit card’s credit limit is a score killer – It’s like “the glass is half-empty vs. half-full.” If you owe $1,000 on a credit card with a $2,000 credit limit, you think you’re doing well: You’re not over the limit and you’re not maxed out on the card. So, ideally, pay off your card debt in full each month. Definitely strive to owe less than 30 percent of your credit limit.

* Closing a credit card account will never raise your score and could actually lower it. People often close out an account they rarely use, saying that because they have less available credit, it should raise their credit score. However, it won’t help because it may lower the average age of your accounts and if you have other card debt you will now have a higher debt ratio. Owing a total debt of $4,500 on your combined credit cards’ total limit of $12,000 scores better than owing $4,500 on a total credit limit of $9,000, for example.

* Carrying credit card debt each month does not help your score – Often consumers will remark to CCOA’s counselors and educators that they make sure to carry credit card debt on their credit cards rather than paying it off every month so that it will improve their score. But the credit scoring game’s rule is that the less you owe, the better. So owing nothing on your card is better than carrying over a balance on it from month-to-month. That being said, if you rarely or never use your credit card, that won’t help your score as much as using it once a month and paying off the balance in full. Credit scoring companies like that you have credit cards and that you use them. Additionally, many credit card companies are now cancelling card accounts that customers rarely or never use, so to keep that card active and that credit score up, you might want to use that card once or twice a month.

For a free budgeting and credit counseling session, consumers can contact CCOA at (800) 889-4916 or go online to CCOA’s Debt Management Program can lower interest rates and lower monthly payments to help debtors become debt free.

Credit Counseling of Arkansas (CCOA) is an Arkansas-based, non-profit organization that is supported by grants to provide free financial seminars, free and confidential counseling on budgeting, credit, home buying and mortgage delinquencies and a debt management program. Founded in 1995, CCOA’s free counseling is available in-person, by phone and online. CCOA helps over 20,000 people every year with free financial counseling and education. For free and confidential advice, consumers can call (800) 889-4916 or visit

About: Ethan C. Nobles:
Benton resident. Rogue journalist. Recovering attorney. Email =


  • Chianna said:

    This inrotduces a pleasingly rational point of view.

  • credit rating check said:

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