@Anonymous wrote:
Hi,
I'm wondering which of those above will lower my credit score, if either. My utilization ratio is at 30% right now, but I made a purchase and brought it up to 37%, but I want to bring the ratio back down to 30% again before my bill is due. So I'm wondering if paying off the high balance and bringing the ratio back down to 30% will have a negative effect on my credit score, or if simply returning the product I purchased would have the same impact. I'd like to keep the product, so if paying it off would have the same effect on my credit as returning the product, then I'd like to just pay it off. But something is telling me that returning the product would have a better impact on my credit score than paying off the high balance. Thoughts?
Thank you.
Once the balance reports, FICO doesn't care how you got there, whether it was through paying it down or by having a purchase reversed.
Returning the product has (at least) two potential issues:
1) Timing. It takes some time to get the return credited, so you need to make sure that this happens before it reports
2) Rewards: If you got rewards, these usually will be reversed as well, whereas paying down the balance obviously lets you keep the rewards
Also, make sure it even matters. Are you apping for something significant? If not, the utilization hit doesn't really matter at all. If you are paying interest though, it makes sense to pay down if you can
