I am the guarantor on a new credit card I just got for my business. It has a $50,000 spending limit and 0.0% APR for 12 months. If i spend up to that limit in the first two months and then wait another 10 months to pay off the full balance, will this affect my credit score?
2007-10-04 05:02:56 · 8 answers · asked by prizice24 1 in Business & Finance ➔ Credit
How long will it take for my credit score to recover once I pay off the balance in full? One month? One year?
2007-10-04 05:18:34 · update #1
I agree with bdancer except it's 30% not 50%.
2007-10-04 05:23:19 · answer #1 · answered by ? 7 · 0⤊ 0⤋
It depends on the situation, but overall it will have a limited impact on your score compared to the length and quality of your payment history. Two of the relevent factors included in the score are the balance compared to the credit limit, and the total amount of credit available. The first is concerned with whether you have maxed out or near maxed out cards, you shouldn't. The second watches the total amount of credit available, and it generally shouldn't be more than you need. Don't sign up for a card at every store you shop at just because it gets you 10% off your purchase. But also don't panic and cancel cards or reduce limits, it helps to have those old accounts (longer history), and it could affect your outstanding balance to limit (the first factor mentioned). The overall available credit has a limited impact on your score, but it is important to keep in mind and a good reason not to open promotional cards. I am not sure if this directly answered your question, but my advice is to pay off the card as you are. You won't pay unnecessary interest or fees, and it keeps you from getting into credit trouble (it is surprising how easy it can happen). You have nothing meaningful to gain by maintaining a balance on the card. As far as other ways to improve your score, the most important thing is staying current and keep your accounts open long term. Since this is your first card, I assume you are youngerish, get more of your accounts in your name if possible, utilities, cell phone, car loan. I am not sure what other credit you have, but having just gotten your first card you are well on your way. Stay on top of it for a couple of years and you will have a decent credit score (say 720 - 750), then you may be looking to add a car loan, mortgage, etc. and will have the chance to get an excellent score in no time.
2016-05-20 22:57:01 · answer #2 · answered by carlene 3 · 0⤊ 0⤋
As long as you are paying the minimum amount each month which for that spending limit might be like 1K a month, then you should be okay.
You cannot just charge 50K and not pay anything until 10 months later.
Plus you want to keep your spending to about 30% of the limit of the card.
2007-10-04 05:13:51 · answer #3 · answered by Megz 6 · 0⤊ 0⤋
If you max out the card, it will affect your debt to available credit limit. This will negatively impact your credit score. Anything over 50% kills your score. Of course, this is based on the total credit limit and debt of all your credit cards.
Of course you score will recover when you've paid the balance down.
2007-10-04 05:12:57 · answer #4 · answered by bdancer222 7 · 0⤊ 0⤋
Even the interest rate if 0%, you still need to do MONTHLY payment. If you wait till 10 months later to pay, your credit would be ruined, not just as simple as your credit score would be lower. There is also minimum monthly payment, so is not just any amount that you want to pay. So do your monthly payment (preferable high then the minimun or the interest accrued, whichever is higher) and do pay on time.
2007-10-04 06:26:02 · answer #5 · answered by Anonymous · 1⤊ 0⤋
BDancer and Spiffyman got it. It's not the using the 10 months to pay it off that will hurt your credit; it is that you use more than 30% of your credit limit that will hurt your credit. In your case more than $15000 would do it.
2007-10-04 05:58:52 · answer #6 · answered by jarel_chico 2 · 0⤊ 0⤋
Your score will drop significantly because your utilization for that card will be at 100% and your overall utilization will be increased as well. Utilization is 35% of your score. However it will go back up after you pay off the balance and return your utilization to it's normal level.
2007-10-04 05:14:19 · answer #7 · answered by Delaina77 3 · 0⤊ 0⤋
are you really going to have that $50,000 in cash to pay it all off after the 12 months
if you dont you might end up paying for all the interest from the first 12 months.
read you CC guidlines
2007-10-04 05:13:54 · answer #8 · answered by Erik N 4 · 0⤊ 0⤋