Just because a credit card company gives you a high limit, does not mean you should use all of it -- doing so can destroy your credit. The damage to you credit can be long lasting and immediate, because it can take years to pay off a large credit card loan since interest rates are high on unsecured lines like a revolving loan.
Identification
The credit reporting agencies will find out about a high credit card balance as soon as the lender updates your account. Most creditors send information once a month, so expect this to affect your score in about a month, according to credit counselors Paul N. Ellinger and Angela C. Lyons of the University of Illinois at Urbana Champaign.
Effects
The Fair Isaac Corporation, designer of the credit scoring formula adopted by most lenders, keeps the exact importance of your credit card obligation to your available limit -- known as credit utilization -- a secret. Credit utilization, however, is part of the amounts owed category of the FICO score, which counts for 30 percent in the FICO formula.
Considerations
Most consumers have a different, albeit close, score from each of the three major credit bureaus -- Experian, Equifax and TransUnion -- because lenders can report to whichever agencies they choose. It is possible that a credit agency may never find out about your high credit card balance or even that you have the account.
Tip
You can update your account immediately, especially if you want to apply for a loan, after paying your debts by calling a "rapid rescoring" service. This type of service usually comes from a credit rating agency independent of the big three. They can correct information on a report in as little as three days or as long as two weeks.
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