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You forgot the most important part: never have an unexpected expense, like going to a hospital or your car breaking down.
We got a new card, no interest for a year. Put our entire kitchen reno on it. Credit score went down 47 points altogether. Paid it all off, credit score went up 17 points. All of this inside 6 months. It doesn't make sense lol.
High utilization affects your score. For example, if you have a credit limit of $1,000 and have a balance of $900 when reported to credit agency, your utilization will be 90%. This will negatively impacts your score even if you pay it off on time. It is possible to avoid this by paying off purchases immediately, since your balance is only sent to the credit agencies once per month. Also if your limit was $10,000 the same balance would only be 9% utilization which is a lot better.
Oh interesting. A friend is a financial advisor and had told me that he often just pays his card immediately after making a purchase. That must be why.
I pay mine every Thursday so it clears Friday and I'm ready for the weekend.
or it's just because he doesn't want to pay interest payments.
Interest or not, you should never carry a balance on a credit card. You should also never have more than 10% utilization.
Looks like you probably did three things which hurt your score… having a new account, carrying a balance, and possibly having more than 10% utilization.
I know the whole credit score thing seems stupid, but if you know how their calculations work you can get a high score in just a few years of doing everything correctly.
right, the thing that idiots do is load up their card once they get one and then make minimum payments.... tanking their credit. and instead of paying it down... they open up a new one.
I recently was a cabinet seller, and basically 100% of my customers either paid cash or paid on the Lowe’s card to get the 5% discount, then paid it off immediately with a different card.
So, among the population of people doing kitchen renovations, it seems your case is toward the “overextended” end compared to how most people do it.
In your case it was probably just credit utilization ratio that got you. I doubt they’re considering the types of purchases.
Just saying, in my experience at a big box home improvement store, basically everyone who buys cabinets does so with cash on hand.
Everyone has some great points about credit cards in here. Just like to point out that despite how good they are most of you missed the point completely.
If my credit score goes down 50 points for a reported balance, once that balance is paid off, not returning to the original score is simply absurd. It's a penalty just for existing in the system.