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over800
Posts: 2
Registered: ‎10-28-2008

Large credit card balance for one month

Hello! I am new to these forums.  If this information can be found elsewhere already, could someone please direct me there?  Here is our situation:

 

We just put a new roof on the house and the amount due is $10K.  My husband wants to put it on his credit card and pay it off in full when he gets the credit card bill.  The card he is thinking of using has a $15K credit limit, of which he uses about $1K on a monthly basis.  His current credit scores are very good, with the lowest being around 790.

 

My questions are:  Will this transaction negatively impact his credit score?  If so, for how long?

 

Thank you in advance for any assistance you can give to me.

Contributor
reots
Posts: 107
Registered: ‎12-05-2008

Re: Large credit card balance for one month

[ Edited ]

If you are doing it strictly for rewards points, pay it off as soon as it posts on your card, before the statement date. Then there will be no FICO impact at all.

 

If you let it post as balance due on your statement expect to lose 25-50 points until its paid off to less than 9% of your credit limit on that card. This is due to the negative factor of having >60% utlization on a card

Message Edited by reots on 05-07-2009 08:00 PM
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Large credit card balance for one month

Hi, welcome to the forums!

It will probably have a negative impact, but only temporarily. If he has a whole lot of extended and unused credit, it won't have that big of an impact. If he only has a few cards, or if he's showing balances on the cards he has, it might "hurt" more.

Nevertheless, it will only affect his scores until the $0 balance shows back up. In fact, if he pays off the balance in full before the statement posts, it won't affect his scores at all. Scores are calculated from the info on credit reports, and most credit card companies report when statements "drop" (are first available for viewing.) It takes 1 day to 1 week generally for the updated balance to show up on the reports and affect the scores.

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These will give you the background knowledge you need to understand what you read here on the forums.
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Established Contributor
YoungEntrepeneur
Posts: 586
Registered: ‎03-03-2009

Re: Large credit card balance for one month

It will NOT affect your score directly. If he usually charges $1,000 monthly on the card, it will raise red flags. The creditor might panic and reduce your CL down to $10k if you don't pay it off soon enough and that will raise your utilization which will decrease your FICO score.

 

Who's the lender of the credit card that you will be using to pay for the roofing? 

Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007

Re: Large credit card balance for one month

[ Edited ]

I would assume with scores close to 800, he won't have any problem. I assume that means he has several other cards with good sized credit limits.

 

In the last 18 months I have:

 

Done a BT for $40,000 to a card with a $46,000 CL. I usually charge $1-5,000 per month and PIF.

 

Made one charge for $19,920 on a card with a $20,000 CL that had been unused for most of a year. Yes they called me and asked if it was legit. Highest balance any month before that was less than $2,000.

 

Done a BT for $12,000 against a card with a $15,000 CL that was normally used for a few hundred a month and PIFed. 

 

Done a $10,500 BT on a card that had never had a single charge over $2,000 ever and had been unused for a year or so.

 

Never had a problem except for Amex Business Credit Line and I don't think that counts since we know they were cancelling the whole program anyway.

 

If he feels uncomfortable, he can always call them and make sure it doesn't alert their fraud department.

 

BTW, the $40,000 BT gave me a large hit on my FICO, about 20 points as I recall. If you pay it off, the score goes right back.

Message Edited by GregB on 05-07-2009 08:50 PM
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Large credit card balance for one month

[ Edited ]

reots wrote:

If you are doing it strictly for rewards points, pay it off as soon as it posts on your card, before the statement date. Then there will be no FICO impact at all.

 

If you let it post as balance due on your statement expect to lose 25-50 points until its paid off to less than 9% of your credit limit on that card. This is due to the negative factor of having >60% utlization on a card


Depending on how much total CL's on all cards, this won't shuldn't affect you more than 20 or so points (unless this is your only card and it makes your total utilization very high).  But as hauling and others said, you don't have to let it report on the CR at all, just pay after it posts to account.

 

And DO use a reward card.  At only 1% that's a nice $100 rebate that you might as well have :smileyhappy:  and more if you have a better reward card.

 

Myself, I nearly max out a couple of my cards on a regular basis, but don't carry a balance, so they are used to that I guess.

 

 

Message Edited by txjohn on 05-08-2009 05:43 AM

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over800
Posts: 2
Registered: ‎10-28-2008

Re: Large credit card balance for one month

My husband is planning on using a card from Citibank.  It gives him a certain percentage back to be used toward the purchase of a new or used vehicle within the next five years.  (He is planning on buying a different vehicle within the next five years.)

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