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75 pt drop overnight...next move to improve?

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75 pt drop overnight...next move to improve?

We were looking to refinance mortgage but wanted to raise my fico score first.
So we decided to breakdown and get a credit card. My thought was that by getting c.c. then running up charges and paying on time was the way to get your score up.
Well shortly after receiving a card with a  $7,000 limit my score did raise about 40 points.
This was great, now I thought all we need to do is run up some charges and start paying them back on time. This would surely raise my score even more.
So my wife and I went out and treated ourselves to some much needed appliances (totaling around $2,500).
That was all we wanted. We got our appliances, and made our first payment immediately.
We our now on way to raising this score even higher (right?) wrong when my next score alert came I felt sick in the pit of my stomach to see a 75 point decrease. This was a hard lesson to learn.
Had I known this would happen, I would have gladly kept a zero balance and been satisfied with my initial point increase.
However, I must now decide the next move to get score where it needs to be.
I need quick results if possible.
Do I pay off c.c. balance in full immediatedly (which will deplete closing cost savings)?
Do I pay off c.c. in a few large sum?
Any advice that will help is appreciated.
 
Message 1 of 4
3 REPLIES
Frequent Contributor

Re: 75 pt drop overnight...next move to improve?

The reason may be that you are at about 35% utilization on that card.  Definitely pay it down to around 9% ($630).


Message Edited by HouseHunter on 08-07-2007 09:57 PM
Message 2 of 4
Member

Re: 75 pt drop overnight...next move to improve?

Man, whoever is giving you such advice (open new credit cards before re-finance).
 
> My thought was that by getting c.c. then
> running up charges and paying on time
> was the way to get your score up.
 
Your thought was exactly wrong, esp. with run up charge and pay up on time.  Only charge you need to run up is a $1.07 pack of gum, let it post and pay.
 
I am a little suspicious of the sequence of events and the score effect you are describing.  40 pt increase in score?  Do you have other highly utilized credit cards?  If so, what was your utilization percentage before?  And what is it now?
 
You need to pull your full power report (not just the score update), and see the top-listed negative factors.
 
You will probably see this:
 
- you have recently been looking for credit,
- you have opened credit in the last year (or recently),
- your balances are large or something like.
 
At any rate, instead of speculating or letting me do the same, you should get your full score power report, see what the bads are and fix them.
 
I suspect that the only thing you can do now is pay down as much balance as possible.
Message 3 of 4
Frequent Contributor

Re: 75 pt drop overnight...next move to improve?

Your credit card accounts should be at 1-9% of the available credit limit. The CRA's like this. NEVER BE LATE.

Pay down and you should rebound soon.

Welcome to the forums.

Cecilia.
Message 4 of 4