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Credit score dropped for seemingly no reason (lemmy.world)

submitted 10 months ago by Pat12@lemmy.world to c/personalfinance@lemmy.ml

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I moved countries a few years ago and am building up my credit score from scratch. I'm cognizant of good practices to build up my credit score like paying my credit card on time. My credit score dropped 10 points in the last month but I don't know why. I've increased my spending on my card because of Christmas and travelling but make the payments right away (typically same day) so that there is not a large balance on my card at the end of the month. The total spending for the month is less than 30% of my credit card limit.

I don't have any other form of credit like loans. Any suggestions why there was a drop?

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[–] somethingsnappy@lemmy.world 4 points 10 months ago (1 children)

I have used a credit card for almost every single purchase for 15+ years. If the balance gets paid monthly, you can spend 200% of your limit and it will not affect your credit score.

[–] thrawn@lemmy.world 2 points 10 months ago (1 children)

I assume you mean paying it off mid statement cycle to spend more than the limit? This is called cycling and can get you shut down by some banks, rare but worth noting.

Anyway the other comment still works with what you’re saying, you could spend 5x your limit by cycling but leave it at 9% when statement posts and it would be good for your credit score. I fully recommend doing this if the bank isn’t sensitive to cycling, could even get a credit limit increase

[–] somethingsnappy@lemmy.world 2 points 10 months ago

I'm sure it depends a lot on the original application and your current credit and income at the time. I thought the person I was replying to said if you put more than 10% of your limit on the card you would take a credit hit. That is clearly false. Cycling and spending more than your limit might get questioned, but credit card companies do not want you to pay your balance off. They want you to be just a bit behind all the time but likely to be able to pay off eventually vs. bankruptcy.