Huge Decrease in Score

[flyingaimlessly]

I recently used my Citi Double Cash card to within about $200 of its limit to reap the cash back benefits on some large car repairs. I paid the statement in full the same day that it cut and woke up today to find that my credit score had decreased 54 points to 743 as a result. My overall utlization is good (13%). How should I go about avoiding huge drops like this in the future? Pay the balance before the statement posts? I thought I read it was best to let the balance report to show that you were making use of your credit? 

[Loquat]

Never let a card report close to it's limit.  Around this part of town it's advised that you let no more than 10% report.  If you want to avoid something like this in the future, pay the balance down BEFORE the statement cuts.  But utilization has no memory so you'll bounce back next month. 

[SouthJamaica]

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@flyingaimlessly wrote:

I recently used my Citi Double Cash card to within about $200 of its limit to reap the cash back benefits on some large car repairs. I paid the statement in full the same day that it cut and woke up today to find that my credit score had decreased 54 points to 743 as a result. My overall utlization is good (13%). How should I go about avoiding huge drops like this in the future? Pay the balance before the statement posts? I thought I read it was best to let the balance report to show that you were making use of your credit? 

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Yes it's the statement balance that gets reported, so if you'd paid before the statement cut it wouldn't have happened. Optimum revolving account reporting for FICO scores is 1 card reporting a small balance, with others reporting zero balance.

[Anonymous]

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@flyingaimlessly wrote:

I recently used my Citi Double Cash card to within about $200 of its limit to reap the cash back benefits on some large car repairs. I paid the statement in full the same day that it cut and woke up today to find that my credit score had decreased 54 points to 743 as a result. My overall utlization is good (13%). How should I go about avoiding huge drops like this in the future? Pay the balance before the statement posts? I thought I read it was best to let the balance report to show that you were making use of your credit? 

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No, your statement will show the amount you spent during the period even if you paid it off before the statement cut. There is never a reason to let the balance carry (other than having one card with a 1% balance for score optimization). You essentially made it so your credit report will show a maxed out credit card until the next statement cuts, which is a huge (albeit temporary) hit to your credit (anything above 90% util on a card is considered "maxed out").

[HeavenOhio]

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@flyingaimlessly wrote:

I recently used my Citi Double Cash card to within about $200 of its limit to reap the cash back benefits on some large car repairs. I paid the statement in full the same day that it cut and woke up today to find that my credit score had decreased 54 points to 743 as a result. My overall utlization is good (13%). How should I go about avoiding huge drops like this in the future? Pay the balance before the statement posts? I thought I read it was best to let the balance report to show that you were making use of your credit? 

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Zero debt dings your score, but too much debt is worse. Utilizing 28.9% of your limit or less is considered responsible. 8.9% or less optimizes your score. You don't have to optimize your score unless you're about to apply for important credit, but in the meantime, you should keep responsible usage in mind. That may mean making a payment sometime before the statement cuts in order to bring your numbers in line. If you're near a card's limit, you should make a payment ASAP if for no other reason than to be able to continue to use your card.

[pipeguy]

If the high utility is the only reason for the score drop, and you paid the amount in full, then in fact its a one month "ding" that'll recover on your next statement. If you are not seeking new approvals in the next month, which you'd probably get with a 743 score anyway, it's a non-factor.

Not directly speaking to the OP here, but I think or at least see, too many folks worrying about their exact score on a daily basis. My scores bounce around all the time, yet they stay above 750 ish (EX EQ) and 785 ish (775 to 800) on TU. 

My thought is credit is there to use, scoring is a risk factor value and if I carry a higher balance on a card or two over a few months, it does not affect anything as far as my ability to get credit or my APR rates (et al) once you get into prime scores-rates-cards. Truth in advertising: 0% BT or intro promos, I use a bunch and at times those cards will go over 50-60% utility for a month or two or three - I don't care if my scores get dinged because I know they'll recover well in advance before I need additional credit in the future - it's there to use. 

[Anonymous]

pipeguy, you are definitely correct in that unless you are looking to app any time soon that maximizing scores isn't a necessity.  That said, however, it's important to understand that there are many people out there that simply like to optimize them at all times anyway.  Is it necessary?  Of course not.  But, for those that are rebuilding or have been through the "dark times" of poor credit, it can be quite an emotionally satisfying thing to see your scores as high as possible at all times.  I have absolutely no reason to have 800+ scores at this time, but I let 1 card report a balance every month just because I like to see those scores.  I know that if I report all zero balances, my scores will drop into the high 700's.  We all know that high 700's are really no better than low 800's, but I still like the feeling of seeing those 800's even if I have zero intentions of apping any time soon.

[pipeguy]

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@Anonymous wrote:

pipeguy, you are definitely correct in that unless you are looking to app any time soon that maximizing scores isn't a necessity.  That said, however, it's important to understand that there are many people out there that simply like to optimize them at all times anyway.  Is it necessary?  Of course not.  But, for those that are rebuilding or have been through the "dark times" of poor credit, it can be quite an emotionally satisfying thing to see your scores as high as possible at all times.  I have absolutely no reason to have 800+ scores at this time, but I let 1 card report a balance every month just because I like to see those scores.  I know that if I report all zero balances, my scores will drop into the high 700's.  We all know that high 700's are really no better than low 800's, but I still like the feeling of seeing those 800's even if I have zero intentions of apping any time soon.

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Can't say I disagree with anything you said and yes I've crashed and burned too so I understand very well the recovery process. I just don't have the time or attention span to play the game for a no actual net-sum-gain once one gets say overr 740, but that's just me. As soon as I pay down some of those promo balances I'll shoot up over 800 in at least 2 of my 3 CRA reports and enjoy the personal pat on the back...but then I'll go buy a house or car and watch them go back down  

[Anonymous]

Perhaps it matters in part how far removed someone is from their poor credit days.  I'm less than 2 years from my lowest point, so 800+ scores are a very new thing for me.  I can see though how over time the novelty may wear off and that I'll likely at some point start micromanaging my profile far less than I do now.  You're absolutely right when you refer to it as "playing the game" since that's exactly what it is.  I think the fun of playing the game, at this point for me anyway, is why I still do it.  It's fun to learn the techniques of maximizing scores from this forum, implementing them and maintaining them. 

I guess once you see your scores top out at X, seeing them anywhere below X can be a bit of a letdown and a motivator to get back to X.  I feel like it's like reaching your peak at anything really... say a sport such as marathon running or body building.  I'd imagine that whenever someone sets a personal best (fastest time, heaviest weight lifted, etc) they are usually trying to beat that personal best.  If they can't beat it, maintaining it is the next best thing.  Any time someone falls short of their personal best, no doubt the goal is to get back to it.  As with anything in life though, there comes a time when priorities change and once something becomes less important naturally one won't excel at it the way they did prior.

[NRB525]

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@flyingaimlessly wrote:

I recently used my Citi Double Cash card to within about $200 of its limit to reap the cash back benefits on some large car repairs. I paid the statement in full the same day that it cut and woke up today to find that my credit score had decreased 54 points to 743 as a result. My overall utlization is good (13%). How should I go about avoiding huge drops like this in the future? Pay the balance before the statement posts? I thought I read it was best to let the balance report to show that you were making use of your credit? 

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Yes, it is a good idea to have your balances report, to show use of credit to any lenders who may pull your report, for either SP marketing or HP applications. In the long run, that balance will now be on your report for many years, and will soon show that you paid it off the next month (or at least the next month balance dropped substantially, which is the same as paying it off).

How much was the balance on the DC? What is the limit?

How many other cards do you have and what are their limits? Any thing else reporting any balances on their last statement?

For a 54 point drop, I mus say that seems like a lot, but you were near 800 already. That means you have no missed payments, and may have been strictly optimizing your balance reporting recently?

What is the age of your oldest account? AAoA?