Hi, all...2 distinct questions... 1--does anyone know what kind of effect carrying a high balance on a credit card (within a few hundred of the limit) temporarily (say during a 0% period) then paying it off in full will have on credit rating? 2--in the above situation, assuming I pay off the card in October as planned, how long will it take my credit score to rebound...i.e. will there be lasting effects or will my score rebound once the agencies receive word I've paid (I don't plan to rush and close the account, though!)? Any help is truly appreciated. All the best.
1. Typically high balance on a card will effect the score negatively. How much it's affected depends on the debt to credit available ratio of your credit accounts. 2. You should see some change as soon as the CC company reports your new balance. Is this a current card with no lates? Have you had it a while? If you pay it off and it's relatively new, I wouldn't close it--allowing it to age will help your score.
Thanks for the info...it's one of my newer accounts, but there are no lates there or anywhere else...I'm just glad to hear that the effect of the high balance will likely lessen/disappear as soon as I pay it off and the agencies are informed...didn't think/want there to be lasting effects...I've just used the 0% promotion (risky as that can be sometimes) to get ready for a big move to a new job, where I'll get a bonus I can use to pay off the card). Anyway, is my understanding of your response correct? Thanks again.
Your score will rebound as soon as the lower balance is reported. How much the negative impact will be depends. No one can really understand FICO. Part of the score is total balances to total credit available, but there is a part based on individual cards over 50%. If you're going to pay it off before you need to get a car loan or mortgage, don't worry about it. Score isn't everything, you need to do what makes sense financially as well, and a 0% to get you through something is a good thing. Don't close the account when it's paid. Keep it active by using it every few months for a tank of gas or something. Closing accounts dings your score for a while, and will also lower you overall utilization.
