How much and for how long is this utilization going to hurt me?

[Anonymous]

While I want to cry, I'm telling myself this is not the end of the world. 

I've been rebuilding for 2 months.. in that time I've seen things getting better and while I know it's still pitiful, it feels amazing to see numbers in the 600's. A year ago I was at 495-505 range. 

I worked really hard the last 2 months at bringing my utilization down AND increasing limits where it was possible. 

Last month, I explained what I had been able to do with my Capital One Card:

Credit Card #2 (QuickSilver Cap One)

Limit in April 2015: $500
Balance in April 2015: $487

Limit May 7th 2015: $500
Balance May 7th 2015: $282

Current Limit: $1500 (Requested CLI, no hard pull)
Current Balance: $288

 Well… I haven’t been on the boards for the last 20 days because I became very, very ill. It’s been a very scary and painful months with ER visits, hospital stays, and a small pharmacy in my home. I’m responsible in that I have medical insurance and pay my premiums BUT, no, I didn’t budget or plan for a small intestines blockage.

The copays for all of the last month totaled $843.

Before I cared about credit, I would have just neatly placed that bill in my recycling bin and started blocking calls when the harassment began. However, that’s no longer the case.

So, I used my $1500 limit card and paid all the co-pays for ER, hospital stay, tests and medications.

My utilization is now shot… I went from 18% utilization to 80% utilization overnight.

In the midst of rebuilding I knew I had to come up with extra money to settle some of the baddies on my report. One way in which I decided to do this was cashing out an old life insurance policy I didn’t even know I had. I have a much better one through my employer, so cashing in the old one was going to give me $1,400 to start settling some of those baddies.

Now, my questions:

• Right now, my credit report is not showing the horrible utilization, it’s still reflecting the nice 18%. I don’t know if the life insurance check will get here in enough time to pay it before Capital One reports again. If Capital One reports with this high utilization, how badly is it going to impact my score?
• If Capital One reports before I pay it off, and I pay it off the very next month, will my score jump right back up or it will it stay dinged by how high the utilization recently was?
• Am I making the right decision in paying off the credit card and now having to wait to settle some of the old baddies?

This has been a really tough month, but I’m trying to stay focused and not feel overly defeated by the setbacks.

[Anonymous]

It will go right back up next month as long as you paid what you used. Do as long as you bring it back down to 18% you will be back to where you were.

[Anonymous]

CS_Bella, I'm sorry to hear about the hard month you've had. Hopefully your health gets better as soon as possible.

As far as your Utl goes, as long as you bring your Utl back down your score should shoot back up. There is no memory past 30 days from what I've seen so if you report 80% this month and take a 20 point hit, you should see it back as long as you bring you Utl down before your card reports the next billing cycle. As long as no new baddies show up to suppress your scores.

To answer your final question, yes you are doing the right thing by paying your card down before you start on the baddies. Paying your card down if nothing else will give you a cushion if your health calls for another emergency. Paying the baddies will not affect your current situation if you are in need of funds. Plus you want to make sure that your current card always shows responsible use and payment. Carrying a high balance will kill your cash back and avoiding the high interest on your card whenever possible is ideal. GL

[thomasjm99]

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@Anonymous wrote:
CS_Bella, I'm sorry to hear about the hard month you've had. Hopefully your health gets better as soon as possible.

As far as your Utl goes, as long as you bring your Utl back down your score should shoot back up. There is no memory past 30 days from what I've seen so if you report 80% this month and take a 20 point hit, you should see it back as long as you bring you Utl down before your card reports the next billing cycle. As long as no new baddies show up to suppress your scores.

To answer your final question, yes you are doing the right thing by paying your card down before you start on the baddies. Paying your card down if nothing else will give you a cushion if your health calls for another emergency. Paying the baddies will not affect your current situation if you are in need of funds. Plus you want to make sure that your current card always shows responsible use and payment. Carrying a high balance will kill your cash back and avoiding the high interest on your card whenever possible is ideal. GL

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I think this bolded part is very important to note...  Keeping the balance high not only hurts the UTI but prevents you from using the card anymore, which not only limits your cashback rewrds, but could also affect future CLI's since you can't run as much $$ through the card monthly...

[Anonymous]

I would definitely pay on your Cap. One card to get your util. down.

If you don't mind me asking, what type of baddies and how old are they? I ask because paying on baddies can reset the clock. If they're old, it might not be worth it.

[Anonymous]

I have 5 medical collections($1900) from 4 years ago and one collection from a small credit card. The card was closed and sent to collections 3 years ago, and has changed collection companies 3 times ($623). I also have one baddie from a bank that I've been told by a mortgage broker can be reported continually as new and should be my primary focus. That one is $1300.

[Anonymous]

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@thomasjm99 wrote:

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@Anonymous wrote:
CS_Bella, I'm sorry to hear about the hard month you've had. Hopefully your health gets better as soon as possible.

As far as your Utl goes, as long as you bring your Utl back down your score should shoot back up. There is no memory past 30 days from what I've seen so if you report 80% this month and take a 20 point hit, you should see it back as long as you bring you Utl down before your card reports the next billing cycle. As long as no new baddies show up to suppress your scores.

To answer your final question, yes you are doing the right thing by paying your card down before you start on the baddies. Paying your card down if nothing else will give you a cushion if your health calls for another emergency. Paying the baddies will not affect your current situation if you are in need of funds. Plus you want to make sure that your current card always shows responsible use and payment. Carrying a high balance will kill your cash back and avoiding the high interest on your card whenever possible is ideal. GL

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I think this bolded part is very important to note...  Keeping the balance high not only hurts the UTI but prevents you from using the card anymore, which not only limits your cashback rewrds, but could also affect future CLI's since you can't run as much $$ through the card monthly...

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Not at all. Even with it charged to 100% you can still run all of your monthly income through it. You merely have to use it like a prepaid card. Put your paycheck into it first (minus any bills that can't be paid with the CC), then use it for expenses until next paycheck. As long as you keep a tight reign on your spending, the balance will be lower each time you put your paycheck into the card.

[Anonymous]

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@Anonymous wrote:
I have 5 medical collections($1900) from 4 years ago and one collection from a small credit card. The card was closed and sent to collections 3 years ago, and has changed collection companies 3 times ($623). I also have one baddie from a bank that I've been told by a mortgage broker can be reported continually as new and should be my primary focus. That one is $1300.

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I can't believe a mortgage broker told you that. NO negative information on your credit report can report continually. Negative information has to be removed by law within 7 to 10 years (depending on what it is), and the time starts ticking from the Date of First Delinquency. If the baddie if from a bank, then by law the negative information must be removed from your report in 7 years and 180 days -- period. Even if the account is still open today, any negative payment history has to be removed after that time-frame.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:
I have 5 medical collections($1900) from 4 years ago and one collection from a small credit card. The card was closed and sent to collections 3 years ago, and has changed collection companies 3 times ($623). I also have one baddie from a bank that I've been told by a mortgage broker can be reported continually as new and should be my primary focus. That one is $1300.

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I can't believe a mortgage broker told you that. NO negative information on your credit report can report continually. Negative information has to be removed by law within 7 to 10 years (depending on what it is), and the time starts ticking from the Date of First Delinquency. If the baddie if from a bank, then by law the negative information must be removed from your report in 7 years and 180 days -- period. Even if the account is still open today, any negative payment history has to be removed after that time-frame.

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I forgot to add that I believe if you make a payment on the baddie, it could reset the clock and could report for longer. At least that's how I understand it, someone please correct me if I'm wrong.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:
I have 5 medical collections($1900) from 4 years ago and one collection from a small credit card. The card was closed and sent to collections 3 years ago, and has changed collection companies 3 times ($623). I also have one baddie from a bank that I've been told by a mortgage broker can be reported continually as new and should be my primary focus. That one is $1300.

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I can't believe a mortgage broker told you that. NO negative information on your credit report can report continually. Negative information has to be removed by law within 7 to 10 years (depending on what it is), and the time starts ticking from the Date of First Delinquency. If the baddie if from a bank, then by law the negative information must be removed from your report in 7 years and 180 days -- period. Even if the account is still open today, any negative payment history has to be removed after that time-frame.

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I forgot to add that I believe if you make a payment on the baddie, it could reset the clock and could report for longer. At least that's how I understand it, someone please correct me if I'm wrong.

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That is incorrect. Payments have no bearing on report time. I believe what the mortgage broker was referring to is that the item can be updated every month, making it "fresh" each month until it reaches the exlusion time. Further, CO credit cards that still show a balance are counted against UTI% for scoring and should definitely receive top priority.