Question

Why is your amount owed considered when determining your credit score?

Answer 1

The amount owed on various accounts determines 30% of the FICO score. Apart from the overall amount owed, the FICO scores take into consideration the amount owned independently on specific accounts. If you use a major portion of the credit you are entitled to, it can have a negative impact on the FICO scores. However, using a less amount from the credit limit allowed can give you a better score than not using the credit at all.