Credit cards come with many benefits, the first being the convenience of paying for goods or services when you are low on cash. How you use it and your ability to repay on time impacts your credit record, which influences your credit score. If you have a high credit card user, you may get yourself in a situation where you need to pay higher repayments and interests, especially if you’re late.¹

Your credit usage has a significant impact on your credit score, and therefore you know your limits and how managing your credit balance can help you build your credit record.

What is a Credit Balance?

This is the outstanding amount owing to your credit card company. Every time you use it, the balance increases and decreases every time you repay. Your credit balance affects your credit score, which your mortgage lender will use this score to determine whether to lend you or not. 

Credit Utilization for Mortgage: The Impact on Your Credit Score

A High Credit Balance

The amount you owe in debt has a significant impact on your credit score. This is called credit utilization, and it’s your credit usage in comparison to your credit limit. If your credit utilization is on the lower side, it demonstrates to a lender that you can responsibly utilize credit. Therefore, if your credit card balance is low compared to your limit, your receive higher credit scores. 

On the other hand, higher credit balances lower your credit score and tell a lender that giving you credit is risky.

A Good Credit Balance

The perfect credit balance is zero, but it’s an almost impossible goal to achieve. It means you either don’t use your credit card or repay immediately after use or before your statement’s closing date. But since that’s such a high goal to achieve, maintaining a good balance is advisable.

Financial experts advise on staying on a 30% or lower credit balance against your limit. This level of debt won’t have a negative impact on your credit score. You’ll notice that your credit score goes lower if you regularly max out on your credit cards. Your credit utilization for a mortgage is adversely affected since most lenders will be wary of financing your mortgage

Keeping Tabs on Credit Utilization for Good Mortgages 

You may notice that having an occasion high credit balance does not affect your credit score that much. The score goes back up once you’ve repaid, and your records update accordingly. However, becoming a chronic high borrower lowers your credit score and your credibility as a debtor. 

If you have multiple cards, an excellent way to keep your credit score up would be to spread the utilization such that all cards stay below 30%. Timing your payments before closing each account can also work so that your statement balance stays low, boosting your credit score. Another way would be to pay the credit card debt at least twice a month to keep the balance low always.


“About Mountain West Financial and the CalPATH Home Loan Program

Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.

You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm). A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.

We look forward to working with you soon!


Joe Moore

Branch Manager”


Links to External Sources:

  1. 9 Valuable Credit Card Benefits You Might Already Have
  2. Why That 30percent Rule Of Thumb About Credit Card Use Could Be Costing You,t%20hurt%20your%20credit%20score.&text=The%20lowest%20rates%20are%20generally,of%20loan%20and%20the%20terms.