Credit Utilization and credit score

[Anonymous]

I am thinking about proposing to my girl friend this weekend. My credit score is right now about 705 according to credit karma. I am thinking about putting $5000 on a card that has a $10000 limit. This would still keep my overall credit utilization at 30% because I have 5 cards, but will put my card utilization at around 50%. I was wondering if you think this is a wise decison to use my card and pay cash the next business day in order to receive the reward points.

As an FYI, I am trying to purchase a condo later this year and am also worried about my credit score getting dinged by the higher utilization rate. Do you think it is wise to put the ring on my card or should I just pay cash to avoid the hit on my fico score?

[MarineVietVet]

---

@Anonymous wrote:

I am thinking about proposing to my girl friend this weekend. My credit score is right now about 705 according to credit karma. I am thinking about putting $5000 on a card that has a $10000 limit. This would still keep my overall credit utilization at 30% because I have 5 cards, but will put my card utilization at around 50%. I was wondering if you think this is a wise decison to use my card and pay cash the next business day in order to receive the reward points.

As an FYI, I am trying to purchase a condo later this year and am also worried about my credit score getting dinged by the higher utilization rate. Do you think it is wise to put the ring on my card or should I just pay cash to avoid the hit on my fico score?

---

Hello and welcome to the forums.

I think you have an excellent plan. As long as you pay before the next statement posts the increased utilization will never show. Plus you get the reward points.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work.

[haulingthescoreup]

Plus a fiancee.

Good luck!

[RobertEG]

I am an old man, and perhaps cragged and jaded in my views...

But I don't understand why you would want to sock $5K into a piece of rock.

If it is love, you dont need to prove it by throwing a useless clear piece rock.

Put it to real use.  If the show is important, jsut buy her a zircon immitation.

[cdtotten]

Although I would never buy my wife a faux diamond, I too would never spend $5k on a ring. My wife's engagement ring cost $2,100 and she was thrilled by it. It truly is the thought that counts and sometimes it's a little over the top. Nice 1-1.5 carot 14k gold rings are in the $1500-$2000 range... check out local jewelers instead of big chains.

[Anonymous]

The old saying was that a ring was supposed to be 3 months salary or something.  Yeah.... I'm not sacking 15k on a ring.  At the same time though... that ring counts as a gift for the next few years!  So when her birthday comes, Christmas, Valentine's Day.... all those gift giving days, hey.... i already took care of you. 

So in theory the ring might only cost $1000 throughout the following years.

[Anonymous]

"I think you have an excellent plan. As long as you pay before the next statement posts the increased utilization will never show. "

I think I understand this, but I'd like a clarification about what you mean by "next."  If I borrow money on a credit card, I'm not going to pay before my next statement.  I'm going to wait until I receive the statement (my very next statement) and then pay.  It may be me (and probably is), but it just sounds like you mean he needs to pay before he receives the very statement he gets that says what he owes, and the implication of that is that he needs to pay before the credit card company generates a statement for him, and that can be problematic. 

Of course, as I said, I think I understand what you mean.  You mean that he needs to pay in full before the second statement later is generated.  In other words, when he gets his statement, he needs to pay in full instead paying less than his full balance which may result in not only having to pay interest but may also result in there being an effect to his credit score because of what may be reported to the credit bureau.

[Jazzzy]

---

@Anonymous wrote:

I am thinking about proposing to my girl friend this weekend. My credit score is right now about 705 according to credit karma. I am thinking about putting $5000 on a card that has a $10000 limit. This would still keep my overall credit utilization at 30% because I have 5 cards, but will put my card utilization at around 50%. I was wondering if you think this is a wise decison to use my card and pay cash the next business day in order to receive the reward points.

As an FYI, I am trying to purchase a condo later this year and am also worried about my credit score getting dinged by the higher utilization rate. Do you think it is wise to put the ring on my card or should I just pay cash to avoid the hit on my fico score?

---

Hi Brian,

I think it's a great idea to put in on a card to get your rewards. Everything I can goes on a card that gives me airline miles or cash rewards. The rewards are very lucrative.

If you don't want the FICO score hit, just put the ring on the card. When the charge posts online, go online and pay it off. You will only take a score hit for utilization if you let it show on a statement.

And...congratulations! (Are you going to propose on Valentines Day??? How sweet.)

[Jazzzy]

---

@Anonymous wrote:

"I think you have an excellent plan. As long as you pay before the next statement posts the increased utilization will never show. "

I think I understand this, but I'd like a clarification about what you mean by "next."  If I borrow money on a credit card, I'm not going to pay before my next statement.  I'm going to wait until I receive the statement (my very next statement) and then pay.

 It's certainly OK to do it that way, if that is the way you prefer. At our house, we try to pay off our balances before the statement generates in order to maximize our FICOs.

It may be me (and probably is), but it just sounds like you mean he needs to pay before he receives the very statement he gets that says what he owes, and the implication of that is that he needs to pay before the credit card company generates a statement for him, and that can be problematic. I'm not clear why that could be problematic. We do it routinely, and we've never had a problem.

Of course, as I said, I think I understand what you mean.  You mean that he needs to pay in full before the second statement later is generated.  In other words, when he gets his statement, he needs to pay in full instead paying less than his full balance which may result in not only having to pay interest but may also result in there being an effect to his credit score because of what may be reported to the credit bureau. No...he meant to go online and pay before the statement is generated that would show the charge for the ring. That way, you get the rewards, but you don't take a FICO ding for higher utilization. No one has to do it that way...and many don't. It's just one of the things that can be done if you are trying to maximize your FICO scores. Some people do it only when they are a few months out from applying for a mortgage, for instance, and want their scores to be the best that they can be.

---

[marty56]

---

@Anonymous wrote:

At the same time though... that ring counts as a gift for the next few years!  So when her birthday comes, Christmas, Valentine's Day.... all those gift giving days, hey.... i already took care of you. 

---

I wouldn't even pretend to say I understand women but using that logic one might go from DH to DDH.