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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.
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
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?
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.
@Anonymous 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 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.