Fico score dropped 15 points after paying property taxes

[villemiami]

For the first time in my life, I paid my propery taxes using a credit card in order to benefit from the 5000 Air France miles bonus on my Bank of America Air France credit card, to benefit for the 2% extra cashback of Bank of America Rewards Day on November 6th.

The problem is that my FICO score dropped 15 points on Transunion for example.

It's not a problem if I won't apply for a credit card, but if I do the same next year and apply for a credit card, what should I do differently to avoid this drop in FICO score?

Also, right now, without correcting this drop, when will my FICO score go back to the same level as before?

[Vinjints]

On the surface it sounds like it's probably just a utilization issue.  Did the card report with a balance that's not usually there?

[Patient957]

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@villemiami wrote:

For the first time in my life, I paid my propery taxes using a credit card in order to benefit from the 5000 Air France miles bonus on my Bank of America Air France credit card, to benefit for the 2% extra cashback of Bank of America Rewards Day on November 6th.

The problem is that my FICO score dropped 15 points on Transunion for example.

It's not a problem if I won't apply for a credit card, but if I do the same next year and apply for a credit card, what should I do differently to avoid this drop in FICO score?

Also, right now, without correcting this drop, when will my FICO score go back to the same level as before?

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I really hope you mean 50,000, not 5000 miles!

I assume your score drop was utilization related.  If so, just pay the balance off before statement cut.

If the drop was due to something else, you'll have to provide that info to get good recommendations.

[GZG]

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@villemiami wrote:

For the first time in my life, I paid my propery taxes using a credit card in order to benefit from the 5000 Air France miles bonus on my Bank of America Air France credit card, to benefit for the 2% extra cashback of Bank of America Rewards Day on November 6th.

The problem is that my FICO score dropped 15 points on Transunion for example.

It's not a problem if I won't apply for a credit card, but if I do the same next year and apply for a credit card, what should I do differently to avoid this drop in FICO score?

Also, right now, without correcting this drop, when will my FICO score go back to the same level as before?

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utilization is temporary, your score will go right back where it was before the balance was reported once you pay it and the bank reports updated previous low/0 balance

don't personally worry about reporting balances, banks like seeing cards being used and paid back in full 

you can always ensure that balances aren't being reported as high prior to a future application

[villemiami]

It was really 5000 bonus miles. It's 2% extra cash back, on the first $2500 of the purchase. The drop was due to high credit utilization I think.

[Thomas_Thumb]

If you want to avoid a high reported card utilization; pay down the balance before statement close date. Then PIF any remaining reported balance.

[villemiami]

Thank you. Should I use this tactic only when I know that I'm going to apply for a new credit card soon, or is there some benefit to do it every month?

[Vinjints]

Generally, you don't need to worry about it until the month or two leading up to a new application. However, there are cases/lenders that use trended data that will track your spend over a period of time. Unless you're buying a house or a high-dollar vehicle, I wouldn't worry too much about it. 

[NAVYCHOP]

I pay my c/c balances in full each month-- not always the full balance but always the statement balance to avoid interest.

I have sometimes seen  large temporary dips in my score when I charge large tax payments to a credit card (an AMEX charge card such as the Platinum being the exception.)

The score returns once I pay the balance down to zero.  I gladly take the temporary dip, particularly if it means the credit card company will report an historic lifetime high balance.  I also do not mind a large level of credit utilization reporting.  I figure the high balance  shows other lenders you can manage high balances and the high utilization subsequently paid off quickly is a great way to justify a future CLI when you already have a high five figure CL.  Once you have a high CL I think it is harder to justify a CLI unless you show you actually use it.  I don't know if CC issuers ever home in on what you are using the card for, but I think large tax payments may be judged conservatively as it indicates you have a large income.

[villemiami]

In fact, my mother asked several times for a CLI for her Discover IT Chrome and she was always denied. Then, she used it to pay the property taxes of her condo, and after paying the full balance, she requested again a CLI and she finally got it.