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200 point credit score DROP due to cc use
I just wanted to report a data point to you guys. For business purposes, I recently used my entire credit limit across 10 cards, which equals about $150,000. I carried that balance for about 2 months (don’t yell at me, I came out ahead).
However, during this time, my credit score dropped from 748 “excellent” to 548 “very poor.” Wow! Just for using the credit they gave me! No late payments or anything like that. I was surprised to see it plummet in such a short time.
I paid it all back yesterday and currently have a zero balance, so I’m thinking (hoping?) it will shoot back up in the same way….I’ll report back.
Anyways, I just wanted to let you guys know as it did surprise me quite a bit. Overall it doesn’t matter to me now, but if someone was going to buy a house, car, etc. maybe it would be helpful to know. “Here’s some credit….just don’t use it!” 😉
@Daniel321 — Yes, that’s not surprising if you’re maxing out your credit limit across your entire portfolio. Especially if you’re carrying the balance. I’ve seen large fluctuations in my score when I’ve had to make a very large charge that took me to even 50% of my limit on a single card, so this sounds very normal.
If this is a common occurrence for your business, you might want to look at one of the American Express [B]charge[/B] cards. The spending limit there grows over time, and they are designed to be able to support large transactions.
Your credit score doesn’t really matter unless you are applying for new credit (although to be fair, 548 is horrendously poor). I’ve taken 50-75 point hits under similar circumstances – usually for 0% APR offers on “balance transfers” where I can earn more interest/returns on the cash elsewhere. The score has always rebounded completely within 2-3 statements.