A high balance is reported on trade lines indicating the highest balance the consumer has carried on the product. For loans, the high balance is the initial loan amount, which gives the creditor a good impression of the consumer’s ability to service the debt when compared to current balance. It is also useful in reviewing instalment loans that are no longer active to establish strong financial management.
On revolving accounts, such as a credit card, the high balance refers to the maximum amount the consumer has spent using the product. High balances are accompanied by a date, and often the usage is self- explanatory. For example, multiple high balances on credit cards that coincide with a change of residence are common. However, many high balances accompanied by late payments are a sign to the credit grantor that the consumer has difficulty handling large debts.