Drop in Credit Score

[Anonymous]

I noticed that as of today my FICO score has decreased from 801 to 771 due to the fact thatI used $3k out of my $10k limit on my credit card.

I have 2 questions:

1) Once I pay off the balance in full, does it correct itself right away or does it take time?

2) This is related to charges that I made in January but payment is not due until 1 March - if I paid the full balance a few days ago (before it was reported to MyFICO) would it have prevented the decrease in my FICO score?

Thanks!

[dddewdrop]

It has to do with what the company sends the CRAs every month. Usually what they send is the monthly balance. So what you should do is pay your credit cards down before the statement date not the due date. That is when a snapshot is taken and sent to the credit reporting agencies. And yes as soon as you pay then the next time your statement date comes around and is reported to the CRAs, your score will  reflect that completely. A credit score is a very dynamic number and can change day to day a lot. Good luck. Btw you have such a great credit score that the difference in your score from it dropping a little would not affect anything as far as lenders decisions...

[guiness56]

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@Anonymous wrote:

I noticed that as of today my FICO score has decreased from 801 to 771 due to the fact thatI used $3k out of my $10k limit on my credit card.

I have 2 questions:

1) Once I pay off the balance in full, does it correct itself right away or does it take time?

2) This is related to charges that I made in January but payment is not due until 1 March - if I paid the full balance a few days ago (before it was reported to MyFICO) would it have prevented the decrease in my FICO score?

Thanks!

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You would need to pay it before it is reported to the CRAs.

[Anonymous]

Thanks very much for your feedback, very helpful!

[guiness56]

As for the score correcting itself, FICO is a snapshot of what is on your CR at the time.  If your utilization was 50% last month and 10% next month, FICO sees the 10% and your score would recover.

[Anonymous]

Great, thanks!

[Anonymous]

By the way, I'm assuming that there are a few ways of preventing this from happening going forward:

1) Pay off the credit card more than once a month if the balance is going to be high tn ensure that you stay under 5%

2) Get additional credit cards so that I can split usage between them

3) Increase the credit limit for my one credit card

Which option is the best? Does increasing my credit card limit decrease my credit score?

[guiness56]

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@Anonymous wrote:

By the way, I'm assuming that there are a few ways of preventing this from happening going forward:

1) Pay off the credit card more than once a month if the balance is going to be high tn ensure that you stay under 5%

2) Get additional credit cards so that I can split usage between them

3) Increase the credit limit for my one credit card

Which option is the best? Does increasing my credit card limit decrease my credit score?

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You can pay on your CC however many times you want during the month.  Make sure when it reports to the CRA there is 9% or below reporting.

Yes, if you have 2 CC you can have one report 0 and the other at 9% or below. 

You can increase the CL but the above 2 comments would still apply.

[Anonymous]

Thanks very much.

Which option is the best? Also, I thought that it was below 5% rather than 9%?

Does increasing my credit card limit decrease my credit score?

[guiness56]

If you increase your CL and do not go up on utilization your score will go up.  Increasing your CL should never decrease your score unless your utilization goes up with it.

Having your balance report at 9% or below is a YMMV.  You may need to experiment to find out where you achieve your highest score using a certain percentage.