High Balance effecting Fico

[Anonymous]

I just used my credit card for an emergency to pay for tuition($830.00) on July 13th, but problems my credit card statement ends on the 14th. How big of a hit will this be to my fico score? Will I recover my lost points if the balance is zero by the next statement?

Equifax: 722

Trans: 759

Credit Limit: 4,500

Balance:$830

[Uborrow-Upay]

You're under 20% utilization on that card, so you're good! 

Get that down to under 400 this month, you are very good.

Get that down to 44.00, and you're great!

Welcome to the forum, madhive!!

P.S.  That $830.00 might not even be on this month's statement...sometimes, it doesn't get processed in time to make the cutoff, check online if possible to see if it's even posted to your account.

[JoeBJay20]

Is that your only CC?  If not, what are your total balances and limits?  Ideally you want your individual and total utilizations to be 9% or less.  If it is your only card, then you may lose a few points for having a 20% utilization.  Those points would recover after you pay the balance off. 

[bigtim]

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JoeBJay20 wrote: 
 Ideally you want your individual and total utilizations to be 9% or less.   Those points would recover after you pay the balance off. 

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This brings a question to mind I've been curious about. Suppose many of your CC accounts show past "High Balance" at or near your CL for those cards, say for instance 90%. Although you may have current low util, wouldn't these past habits cause some concern for a lender, compared to another consumer whose high balances are relatively low to the CLs, say 20% or less? And if so, then FICO scoring should factor this in...? Any thoughts? Thanks.

[Uborrow-Upay]

I think that a lender would love to see a past high balance that has been fully paid off in a timely manner, in fact, this may help in obtaining CLIs, too...it has for me.

[GregB]

I have regularly made charges close to CL, several times going from zero to high util. For example one charge of $40K on zero bal on card with $46K limit. Several charges taking $56K card to $51K, and recently two charges on Advanta card (within two days of them cancelling all their cards) taking a zero bal, $12,500 card to $12,273.

I have an Amex card that was CLD last year in several steps from $28,800 to $3,100 due to Amex issues and seemingly nothing to do with me except my FICO was just above 700 instead of normal mid 700s. I have been paying on a monthly statement with it each month and running it to $2,500 to $3,000 each month and then PIFing it. I pay that vendor $5,000-$10,000 per month so I just pick out a combination of invoices and pay something close to the limit. I am planning to start taking it above $3,000 every month. I am thinking they will raise my CL. If they don't do this in a few more months I will call and ask.

As an aside: I have a card that I (stupidly) closed in 2004. It had a small balance on it when I called so they dropped my limit to $200 until the payment hit and then closed it. That card shows on my reports as CL $200, largest past balance $28,523. Nobody has ever commented on it but it sure looks bizarre to me.

Message Edited by GregB on 07-17-2009 09:52 AM

[bigtim]

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@GregB wrote:

I have regularly made charges close to CL, several times going from zero to high util. For example one charge of $40K on zero bal on card with $46K limit. Several charges taking $56K card to $51K, and recently two charges on Advanta card (within two days of them cancelling all their cards) taking a zero bal, $12,500 card to $12,273.

I have an Amex card that was CLD last year in several steps from $28,800 to $3,100 due to Amex issues and seemingly nothing to do with me except my FICO was just above 700 instead of normal mid 700s. I have been paying on a monthly statement with it each month and running it to $2,500 to $3,000 each month and then PIFing it. I pay that vendor $5,000-$10,000 per month so I just pick out a combination of invoices and pay something close to the limit. I am planning to start taking it above $3,000 every month. I am thinking they will raise my CL. If they don't do this in a few more months I will call and ask.

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It sounds like you might be running a business, in which case high charges and regular PIFs would probably be considered a "normal" profile, and therefore might be scored differently... I'm guessing if I recently received a stack of new high limit CLs and began charging them near their max, the lenders might get nervous... I too once ran a business where I had tens of thousands coming in and out of accounts each month where this was absolutely normal.

[JoeBJay20]

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@bigtim wrote:

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JoeBJay20 wrote: 
 Ideally you want your individual and total utilizations to be 9% or less.   Those points would recover after you pay the balance off. 

---

This brings a question to mind I've been curious about. Suppose many of your CC accounts show past "High Balance" at or near your CL for those cards, say for instance 90%. Although you may have current low util, wouldn't these past habits cause some concern for a lender, compared to another consumer whose high balances are relatively low to the CLs, say 20% or less? And if so, then FICO scoring should factor this in...? Any thoughts? Thanks.

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FICO scoring does take this into account.  The scoring algorithm looks at your utilization, the percentage of your credit limit that you are currently using.  It evaluates both utilization on individual cards and your total utilization.  In a normal economic environment, it wouldn't hurt if you had an occasional high balance report that you PIF in a month or two, although your score would change in concert with your utilization.  Prolonged high utilization would set off red flags, as it suggests that you're dependent on credit to meet your financial obligations.  However, in this economic environment, lenders seem to be looking for any reason to issue CLDs or flat out close accounts, and just one month of high utilization is all some lenders need to see before they give AA.