Utilization and FICO Score?

Question

I recently had to purchase a new computer. Circuit City had 12 months no interest so I applied for the card and was approved. The computer was 1300 and the credit limit they game me was 1500. What I am wondering is will this kill my credit score. I keep all my credit cards below 20% utilization so I dont know what this kind of usage will do to me. I plan on paying it off in 6 months if that matters. Any one have an idea?

Answer 1

A lot of factors go into your credit score. Utilization is 30% of your total score. Another factor is new credit that counts for 10%. Because of both of these you MAY take a small hit. Your utilization on 1 card is pretty high, but you also need to look at your total utilization as more of an indicator.

Say before you had $10,000 in total available credit on all cards and $2,000 used. The new credit now gives you $11,500 total and $3,300 used. Even with this new credit you are only at 28% utilization. This is well within the accepted percentage.

But say you if you only had a total credit line of $1000 and $200 used. With the new credit you are now at $2500 total credit and $1500 used which is 60%, and will lower your score a bit.

If you pay on time and have it paid off in 6 months you should be back, if not above, where you were before you got the card.

Answer 2

I agree with OC1999

If you plan on paying it off in 6 or even up to 12 months, it will probably have a "short term" effect on your scores due to the utilization.

As long as you don't plan on making a major purchase, car or home, and aren't planning on applying for new credit before you drop the utilization down on that account - the short term score drop won't harm you.

And as OC said, after you pay it off (or get it below 30% utilization) your scores will rebound and probably be higher than they are now.

Answer 3

definite you're brilliant about how they calculate utilization. They calculate the rankings in accordance with a "share" of accessible credit (all credit decrease) as against credit used (revolving money owed in elementary words). fixed installment loans like vehicle, loan and pupil loans aren't from now on used to calcualte your utilization. in elementary words revolving charges and credit limits. FICO rankings are not that sensible to calculate max outs yet yet I truly have heard city legands about it. on your problem, i ought to attempt to get utilization less than 10% (entire) and in no way keep one card more effective than 30% in case you are able to. at the moment, the rankings examine out your revolving debt as against your credit decrease in its entirity, no longer one card at a time. lenders will look extra heavily notwithstanding for loan and vehicle loans and American coach as well.

Answer 4

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Another way to obtain free credit report is by calling the toll-free number provided by the FTC and the three leading credit reporting companies. However, FTC warns consumers not to contact the three credit reporting companies individually. This might be caused by the fact that the credit reports obtained by individually contacting the three major credit reporting companies come with a fee. Read more about it at: http://www.credit-card-gallery.com/article/164,How_To_Get_Your_Credit_Score_For_Free