Yikes! High utilization on a card that usually has zero bal... 34 point drop!

[Anonymous]

I know exactly what caused this to happen, but just thought it might be of interest to anyone who usually has low utilization and is wondering what would happen if they allowed a card to report a high balance.

I have a US Bank visa with a $1000 limit. The limit was $500, and it was a secured card - but I just got it made 'unsecured'. I usually carry no balance on the card at all, and certainly haven't let one report for months. However, I had to make an urgent purchase for work recently, and upon finding a supplier late on a Friday evening and finding that they wouldn't accept my corporate AmEx purchasing card, I had little choice but to stick it on my Visa, thinking I'd have the funds back in a few days, the balance paid off before it got a chance to report, no harm, no foul. Sadly my expense report took longer than expected to be approved and paid, and US Bank unaccountably took 2 days to show the zero balance on the card, despite the fact that I'd paid it from my US Bank checking account. Result: on the same day they finally DID show the zero balance, they also reported to the CRAs - sadly they reported the $771 balance, as opposed to the zero one (at least they also reported the new limit of $1000 instead of the old limit of $500 while they were at it). That took my overall (reported - I've had a couple of CLIs and have a card still not reporting) utilization from 5.3% to 12.5% - something I wouldn't have thought was THAT dreadful - but apparently going from zero to 77% utilization on one card (I only have one other card reporting a (7% util) balance, another 3 that are reporting zero balances, and a mortgage account) is a real killer!!

Got a scorewatch alert today to tell me that my EQ FICO has plummetted from 708 to 674 as a result of that!

I guess it doesn't matter (or shouldn't unless it displeases AmEx upon the occasion of their next soft pull, and sends me straight into FR land... ugh), as I'm not out to apply for credit anytime soon, and hopefully I'll get the full complement of lost points back as soon as the correct balance of $0 is reported in a few weeks... but I must remember NOT to put any work-related purchases on my personal credit cards in future, no matter how urgent they might be!!

Message Edited by fevmlo on 07-08-2008 06:15 PM

Message Edited by fevmlo on 07-08-2008 06:19 PM

[Anonymous]

If you normally only let one card report a balance I would guess your score drop would actually be broken down:

1) Increase in overall util - 5 to 12 - 10-15 points

2) Increased number of cards reporting - 3-5 points

3) High util on a card - 10-20 points

[Junejer]

Allow that card to report a ridiculously low balance next month (like $10 or $15). All other things being equal, your score will go beyond the previous 708.