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Credit score and using CC for reward points
Old 10-06-2019, 07:07 AM   #1
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Credit score and using CC for reward points

Historically our credit card score is 830+, we started using a CC for the reward points in the last two months and our score has taken a hit. The card is paid off every month. We only have 4 open accounts, however the rewards card has a monthly average of $4,000 which is between 10% to 15% of the credit limit for all open accounts. The score this month was 795. In reviewing the report -- the only difference is the card utilization. Is this a typical experience?

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Old 10-06-2019, 08:21 AM   #2
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Credit scores aren't static. A score of 795 is still quite excellent. Enjoy your reward points.
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Old 10-06-2019, 08:28 AM   #3
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This exact thing happened to me. Use 1 card of 3 to charge normal expenses every month. Usually no more than 500 per month paid off monthly. Credit score 830+. Moved and ran up a one month bill around 4K. Score dropped to 799 (only time in years it had been below 800). After move resumed normal spending and score quickly recovered.
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Old 10-06-2019, 08:37 AM   #4
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Credit utilization percentage is probably the reason. The solution is to get MORE juicy sign-ups deals! My score stayed above 800 while I opened 3 cards.
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Old 10-06-2019, 08:59 AM   #5
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Once a person gets into the rarefied air of 760+ credit score, the differences become nearly meaningless.
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Old 10-06-2019, 09:13 AM   #6
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Although I believe credit scoring is a scam, I do find the process fascinating. Even though you payoff the balance monthly, it will affect your score (utilization). You could probably easily offset the affect by requesting a credit line increase. CC companies seem to love giving them out. Chase has a tool called Credit Journey that includes a credit score Ďwhat ifí simulator.

Iíve embraced using CC Cashback programs over the past two years and havenít seen a drop in my score. I donít think thereís much if any benefit for having a score ~>730 or so except bragging rights

Out of curiosity I track about 5 credit scores provided by various financial institutions I belong to. The scores are consistent but one group tracks close to 850 while another group tracks around 800.
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Old 10-06-2019, 09:31 AM   #7
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Credit scores aren't static. A score of 795 is still quite excellent. Enjoy your reward points.
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Once a person gets into the rarefied air of 760+ credit score, the differences become nearly meaningless.
As stated above, it doesnít matter. Therefore I stopped trying to figure out why my credit score changes. I was frustrated that having never even been late on a payment and always paying off my loans early and always paying off my card monthly, I did not have a credit score over 800. Then I realized that it didnít matter. Any loan I ever applied for was approved immediately and at the best rates. Now I ignore the score and just check my report to look for any issues.
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Old 10-06-2019, 10:04 AM   #8
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Out of curiosity I track about 5 credit scores provided by various financial institutions I belong to. The scores are consistent but one group tracks close to 850 while another group tracks around 800.
It's possible that one group is using Transunion and the other group is using Experian. Modest differences in the data will result in 50 point differences like you've seen.

OP, it doesn't matter, as others have said.

However, if you really want to, you could pay off your balance right before your monthly statement closing date so that your statement reports with a zero balance. Most CC companies report your balance to the CRAs when they do your monthly statement.

Alternatively, you could pay off your balance and then dispute the balance with the CRAs. The dispute triggers a mid-month balance update.

Again, it doesn't really matter except for Internet bragging rights.
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Old 10-06-2019, 10:08 AM   #9
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Gal and I both have A grades on different credit factors with Credit Sesame - except for Account Mix, where we have D's. The shame! We only have one kind of debt: credit cards. No home loans, no auto loans, no Student loans, no other loans. My score is often a bit higher than hers because I have more open credit cards and a higher total credit line. If I want to jigger our numbers I sometimes prepay our cards off on the 27th vs letting them auto-pay in the first week of the month. Banks seem to report amount due to Experian et al on the first, so paying off before then makes it look like your credit utilization is close to zero.
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Old 10-06-2019, 10:20 AM   #10
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The way we combat this concept is the following.
Changed our reporting cycle to the 4th of each month.
Pay off the balances each month on the first of the month.
Thus there are only charges for 4 days reported to the Credit Agencies.
The usage is then very small in general of the total available credit and that portion of the reporting is usually around 2% for us.
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Old 10-06-2019, 10:39 AM   #11
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Mine is typically in the high 700s/low 800s so I don't get excited about interim changes. I have a mortgage with a perfect payment record and pay the credit card bills in full every month; no other debt.

From what I've read of credit scoring, your score can get dinged if you're close to being maxed out, but it can also get dinged for "low utilization"- I have about $30K in credit ver two cards and my monthly bills are typically about $3,000, so in theory I could go out on a wild shopping spree and run up $27,000 in debt.

I'll choose getting dinged for low utilization over getting dinged for being maxed out.
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Old 10-06-2019, 11:43 AM   #12
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It's possible that one group is using Transunion and the other group is using Experian. Modest differences in the data will result in 50 point differences like you've seen.

.

Again, it doesn't really matter except for Internet bragging rights.
Yes, there are so many variations of credit score within and among the major bureaus that the whole process is trivial. Now you can "boost" your score instantly using smoke and mirrors offered by some credit bureaus.
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Old 10-06-2019, 02:35 PM   #13
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They do track a high water mark for each card, so even though its 10% of total available credit, it is significantly higher on that one card. It goes back to they prefer you never use more than 40% on any given card.

My honey is stuck at 731, I've used the what ifs and it doesn't seem to matter what he does his score moves 2-3 points max. Our goal was just to get him above 760 as that would shave 1/8th a point off the mortgage if we go ahead and re-finance.
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Old 10-06-2019, 03:17 PM   #14
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When I check my FICO score on Citi Bank they use a scale of 900 not 850, all of my other cards use an 850 scale. Whats up with that?

Your FICOģ Score History
868
APR
868
MAY
868
JUN
868
JUL
877
AUG
874
SEP
Score range is 250 to 900
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Old 10-06-2019, 05:07 PM   #15
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They do track a high water mark for each card, so even though its 10% of total available credit, it is significantly higher on that one card. It goes back to they prefer you never use more than 40% on any given card.

My honey is stuck at 731, I've used the what ifs and it doesn't seem to matter what he does his score moves 2-3 points max. Our goal was just to get him above 760 as that would shave 1/8th a point off the mortgage if we go ahead and re-finance.
See post #10. Can you pull that off?
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Old 10-06-2019, 05:24 PM   #16
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When I check my FICO score on Citi Bank they use a scale of 900 not 850, all of my other cards use an 850 scale. Whats up with that?

Your FICOģ Score History
868
APR
868
MAY
868
JUN
868
JUL
877
AUG
874
SEP
Score range is 250 to 900
There are at least three different CRAs in the US with usually similar but often slightly different data sets on you.

There are also, as it turns out, many different flavors of credit score. One of the newer ones (Vantage 3.0 or somesuch) goes to 900 instead of 850. I think it is a marketing gimmick, kind like amps that go to 11.
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Old 10-06-2019, 06:53 PM   #17
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As others have said at a score of 795 there's really no need for concern at all. It's a great score and the difference between the 795 and the 830's you were seeing before is highly unlikely to have ANY effect at all on you. With a score of 795 you'll be able to get any additional trade lines you might desire/need without issue. A score of 795 will get you the best tiers of auto/home insurance if you decide to replace your existing policies. It all doesn't matter. With all that said if you want to move your score back to where it used to be you need to re-lower your credit utilization. I really wouldn't recommend losing out on cash back benefits, so I encourage you to continue your $4k monthly CC spend as at a 2% cash back that's a free $80 each month (assuming that's your normal spend rate and you continue to pay it off in full monthly). The best way to lower your utilization rate is to go to some of your longer standing other accounts/trades and ask for credit line increases on those trades. You aren't likely to get the increase on your new CC account, but if you've paid those other accounts regularly they're likely to raise your limit and thus lower your utilization rate. In the near term (next 6 months) adding new credit cards while lowering your utilization (which would help the score) would probably do more harm on your score by increasing your number of recent trades. Doing nothing will still see your score gradually increase as the recent trade will eventually age off and that unto itself will improve your score.
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Old 10-07-2019, 05:01 PM   #18
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They do track a high water mark for each card, so even though it's 10% of total available credit, it is significantly higher on that one card. It goes back to they prefer you never use more than 40% on any given card.
Oops. I just got a Costco Visa with a $10,500 limit and immediately charged $4,000 on a cruise and a tank of gas. we'll see what happens with my score!
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Old 10-07-2019, 07:08 PM   #19
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They do track a high water mark for each card, so even though its 10% of total available credit, it is significantly higher on that one card. It goes back to they prefer you never use more than 40% on any given card.



My honey is stuck at 731, I've used the what ifs and it doesn't seem to matter what he does his score moves 2-3 points max. Our goal was just to get him above 760 as that would shave 1/8th a point off the mortgage if we go ahead and re-finance.


Iíve always wondered how utilization is calculated. I suspected a borrower is dinged If one card has a high utilization even if the others are at zero. That hurts folks (like me) who piled into 0 rate balance transfer offers. Iíve asked about this several times when speaking with credit gurus at seminars or on the radio. Not one was able to provide a straight answer.
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Old 10-07-2019, 09:54 PM   #20
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Iíve always wondered how utilization is calculated. I suspected a borrower is dinged If one card has a high utilization even if the others are at zero. That hurts folks (like me) who piled into 0 rate balance transfer offers. Iíve asked about this several times when speaking with credit gurus at seminars or on the radio. Not one was able to provide a straight answer.
Way back when, I was a member of FatWallet Finance, and the users there, who were pretty savvy credit card users, thought that both overall utilization and individual card utilization were factors in determining whether one would encounter problems. At the time the rule of thumb I used was no more than 50% overall utilization and no more than 90% utilization on any individual card. People had different opinions, and most of them were more conservative (i.e., lower percentages) than that.

Nobody *really* knows except the risk management people at the CC companies. They probably all have different rules which are quite complicated (maybe someone with a longer credit history or older or a higher reported income or a homeowner would be given more latitude on utilization). Their rules and criteria also probably change over time with how well the CC company is doing, how well the economy is doing, and what the CC competitive landscape looks like.
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