when the total outstanding balance decreases a borrower s credit score improves timeliness however is not as easy to improve since delinquent payments are a factor that can remain on a credit report for seven years 
average balances are not always a part of credit scoring methodologies however if a borrower s balances are drastically changing over a short period of time due to debt repayment or debt accumulation there will typically be a lag in total outstanding balance reporting to the credit bureau s which can make tracking and assessing real time outstanding balances difficult calculating average outstanding balancelenders typically calculate interest on revolving credit such as credit cardsor lines of credit using an average of daily outstanding balances the bank adds all the daily outstanding balances in the period usually a month and divides this sum by the number of days in the period the result is the average outstanding balance for the period for loans that are paid monthly such as mortgages a lender may instead take the arithmetic mean of the starting and ending balance for a statement cycle for instance say a home borrower has a mortgage balance of 100 000 at the start of the month and makes a payment on the 30th of the same month reducing the outstanding principal amount to 99 000 the average outstanding balance for the loan over that period would be 100 000 99 000 2 99 500 frequently asked questionsan outstanding balance is the total amount still owed on a loan this is the amount of a loan s principal amount i e the dollar amount initially loaned that is still due and does not take into account the interest or any fees that are owed on the loan borrowers can find this information on their regular bank or loan statements they can also usually be pulled up from a lender s website for viewing at any time outstanding balance refers to the amount still owed on a loan from the perspective of a borrower or lender remaining balance instead refers to how much money remains in an account after spending or a withdrawal from the perspective of a saver or savings bank some lenders charge a fixed percentage such a 2 5 others will charge a flat fee plus a fixed percentage such as 20 1 75 of the outstanding balance as the minimum payment due penalty fees like late fees as well as past due amounts will typically be added to the calculation this would increase your minimum payment significantly 