How bad will my credit score be affected if I temporarily use over 50% of my credit limit.

Ryan123x

I've started a new job, and until I get my first paycheck I'm having to rely significantly on my credit card to 'get by'. I'm going to have to use over 50% (about 70-80% or so) of my credit limit (it's only a small credit limit), I'm signed up to online credit reference agencies and when they next see my credit card data I'm expecting my credit score to drop quite significantly. Iv'e worked out my income and I can payback almost 100% of my credit card debt when I get my next paycheck so the high utilisation rate will only be temporary, but how badly will my credit score be affected?

Is my credit score going to return to normal in my next credit reference check, or is it going to take a couple of months to build my credit score back up again?

Sorry if it seems like a bit of a silly query, but I'm relatively new to the credit card game and still learning how it works.

Eagles1905

Short answer is....it won't. You would only pick up a negative on your credit file if you missed a payment, defaulted, went over the agreed credit limit etc etc etc.

Also, ignore the score. It's not a true reflection of your credit worthiness, it's the management of your credit that these agencies look out for. Believe me, I used to get hung up on the score and its completely meaningless!

kwame41

Dont worry about it. Your credit utilisation will be high so might cause you problems if you apply for new credit.

Ignore your score its meaningless its your history that counts. As long as you are making regular payments its not a problem.

Medium term look to reduce borrowing.

DCFC79

As long as you make the minimum (or more if you like) payments then thats all that matters. Only you can see the score so dont let it worry you too much.

Ben8282

Your 'paycheck'. What US site did you copy and paste this from?
Unless you intend to make an application for something, I don't understand what this 'credit reference check' that you are expecting is and why you are so concerned about it. Can you clarify?

Ryan123x

Each month experian checks with capital one (my credit provider) to get a record of my borrowing which they use to determine my score. Experian will be doing that at a time when my credit utilisation rate will be about 70%. As such my credit score for that month is likely to drop quite a bit.

How badly will it be affected? And assuming I pay back the full amount on my credit card in the same month, will my score fully recover within that month, if not how long will it take to rebuild it?

[Deleted User]

It won’t be affected.

Have you not read anything above?

No one sees or cares about the CRA scores and ratings

Nebulous2

Credit is a tool for you to use if you need it. As long as you don't dig a hole for yourself by getting into debt you cannot repay you should use it to your advantage. Short term use of a credit card until your pay from a new job comes through is making very good use of it in my view.

The credit score appears to turn all that on its head for many people. They do things that may be against their best interests simply to influence the number. That isn't a tool, that's an albatross around your neck.

Concentrate on the important things, doing well in your new job, building relationships with your colleagues, and be thankful you have the credit there when you need it.

Dandytf

My utilisation is shocking @75% approx.
Though I'm not keeping recently unused card or cards open for the sake of utilisation.
Keeping focus on reducing balances.
1st step c+ cleared and closed
2nd Step-combined Cap1+Luma yesterday -Cap1 survives Luma card (not balance) is gone -why less temptation if I have lots of cards to consider using.
3rd Step -Tesco card is next to take larger payments to clear +500 balance
Have already agreed with Cap 1 yesterday I'll raise combined card min payment by 5 to 10 pounds until I can raise further during 2019.
That's all whilst I try some basic effort on larger balanced cards late 2019 towards future years.

PRAISETHESUN

Ignore the credit scores as provided by the UK CRAs, they are basically meaningless as no-one else will see them but you. Every lender will make their own decision based upon the contents of your credit file, so what matters most is your credit history.

I'm not sure what you mean by your next credit reference check, as lenders only make a search on your file when you submit an application. Temporarily having high-utilisation probably won't affect things much, unless you are doing this consistently over multiple months, missing payments or you are planning on making a new application in the imminent future. Otherwise if you try to keep it between 20-50%, anecdotally this is the "sweet spot" so to speak about showing you have credit utilisation that you can responsibly manage but not so high that it negatively affects your credit history when viewed by lenders.

Dandytf

PRAISETHESUN wrote: »

Ignore the credit scores as provided by the UK CRAs, they are basically meaningless as no-one else will see them but you. Every lender will make their own decision based upon the contents of your credit file, so what matters most is your credit history.

I'm not sure what you mean by your next credit reference check, as lenders only make a search on your file when you submit an application. Temporarily having high-utilisation probably won't affect things much, unless you are doing this consistently over multiple months, missing payments or you are planning on making a new application in the imminent future. Otherwise if you try to keep it between 20-50%, anecdotally this is the "sweet spot" so to speak about showing you have credit utilisation that you can responsibly manage but not so high that it negatively affects your credit history when viewed by lenders.

I recently read that Experian advised upto25% utilisation if possible.
That's a few years in my own combined balances.
I though have medium term plan, maybe I'll have +1k to make a medium difference on larger balances once I get through to year 2 of h2save during 2020.