@pricetyler wrote:
@Revelate wrote:
@pricetyler wrote:I purchased an engagement ring roughly 12 months ago and recieved 12 months 0% finance.
I ended up paying it off within 6 months but I knew if I put it on my credit card it would screw up my utilization percentage.
I try to keep mine below 5%.
Plus, loans like this can often raise your credit score a little as they show you can handle multiple types of credit.
The only reason I would ever put a large purchase like this on a CC would be:
1. If the rewards you would be getting on the card for the purchase would outweigh the risk/your credit dropping a little
2. If the card still had a 0% intro and you would definately pay it off in the next few months
3. If you couldn't handle another HP on your report
I would still highly recommend not putting this charge on your CC and taking out a 0% finance loan with the company.
Nothing that baby secured loan at trivial interest rates can't solve... or anyone with an auto / personal / mortgage / etc. Consumer Finance Accounts are to be avoided wherever possible if there's equivalent paths: if it's a smart move financially fine, but FICO does penalize you somewhat for it.
Utilization is temporary, don't understand the rationale to micromanage to that level honestly. Big expenses happen and are a normal part of life, living in fear of lenders beating you with the AA stick makes little sense. It's one thing to be maxxing out your file sure, but single tradeline utillization with a pattern of paying it off in chunks? Not a problem certainly at least in today's market.
I try to treat my CC as a debit card. I never add anything I don't have in my bank account. It is a good rule to follow but I understand not everyone can do that/not everyone wants to. But it does promote healthy spending habits, and I was trying to relay that back to OP.
Plus, what happens if he puts $4k on a card with a $5k limit. It would kill his util very quickly.
Then what happens if you then came in to some financial hardship a few weeks later?
At least with a loan you have like 12 months to pay it off, and if you pay it off quicker; great.
It just seems safer.
I agree with every one of your points except the desire to run out and obtain the 0% financing through Kay's or whoever on the theory it'll improve one's FICO score.
Safer maybe, maxxing out one tradeline isn't a dealbreaker if you have additional limits, I lost 14 points on a mortgage score from it off my 660 at that time. Non-trivial but not end of the world if not applying for anything serious. Taking a new tradeline that FICO assuredly views as a CFA, suboptimal long term if you think you're confident in your financial stability.
The breathing room generated by the CFA I would suggest is less than you suggest, lenders expect CC's to be used as short-term float, that's what they were designed for and it's not a big deal as a result if we're talking financial equivalency.
SE summed it up well in terms of tradeoffs.
I perfer the installment route option because it'll provide you a set amount and affordable as well only if it was 0%. Secondly, I understand that upon marriage you will be getting an increase in your income due to BAH, etc; however, understand your bills will likely increase to. I assume you aren't living on your own now due to the high precentage of income you will gain once married. That's another reason why I recommend the installment. Besides moving is expensive trust me. I've done this over 16 times in the past 10 years of military service. Everytime you set up a new home it's (unexpected costs from restocking your pantry, to entire set of household products) tend to add up pretty quickly. I believe both options are great 0% is 0% and keep the cost low to ensure you'll be able to cover that monthly expense... TBH my main choice would have been to save then propose but it seems as if you don't want to wait. I remember when me and my BF started talking about marriage, that was a big thing... If it can't be bought cash, I don't want it when it comes to an engagement ring or even wedding... I'd wait patiently. Congrats on your soon to be Engagement!!!!!!!!!
As this thread is now more than a year old and the OP hasnt been online since Feb it is now closed to further discussion.
gdale6
myFico Moderator
