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Q: I have a small balance on one of my credit cards. Does carrying this balance hurt my credit?
A: Carrying a card balance and even the balance itself is not what will necessarily hurt your credit score. What will hurt it are late payments. Enough of these and your credit score will drop sharply. Even one or two can have an unfavorable impact on it.
On-time payments, either the minimum ones or those which pay a balance off in full, will actually boost your credit score as they reflect positively on your credit history. These show credit card companies and other lenders that you are responsible with your finances.
There are some areas that carrying a card balance can affect. These include your budget, and your ability to qualify for additional credit.
When you carry card balances, interest rates and finance charges are calculated on those amounts. It is these and other fees that may be assessed on carried balances, especially if you are making only the minimum payments each month that make it appear that your balance never goes down. In some cases, your balance can actually go up, even after your payments have been posted.
Carrying balances may also affect your eligibility for additional loans. Lenders may look at the balances and decide that you already have enough or too much credit, and may not consider you a good credit risk. This can be true even if your credit score is considered average to good.[include file=/wp-content/themes/customtheme/rec-creditscore.php]