Anyone in banking or loans? Credit rating questions...

[tommy p]

Background: 3-4 months ago I had a credit rating well over 800. In one of my recent statements it said my rating was better than 98% of the population. Because I'm in the middle of building a house, I had to go out and buy $10,000 worth of appliances. Everything else is coming out of a construction-to-perm loan except the appliances - not sure why it's done that way. Anyway, charged them and paid it off on the first bill. My recent statement shows my credit rating has dropped 60 points for carrying a high average balance and my credit rating is now better than only 68% of the population.

The house did not get completed on time and the appliance delivery could not be rescheduled, but they would let me cancel the order and re-order to get a new delivery date. Dumb policy by the store - their delivery company now has to bring back the original order only to get another order for the exact same stuff. Works out for me though - my warranty start date is now later and I saved about $500 due to falling prices. This time I paid by check and now have a nice $9000 positive balance on my credit card ($10,000 credit minus last month's amount due) that I can either request a check for or apply to future purchases. Questions:

1. Since that $10,000 was credited back, does my supposed "high average balance" go back to normal and my credit rating go back up?
2. Can I take a check for the positive balance I have on my credit card now or would that keep my credit rating messed up?

[tommy p]

Bump. Still looking for an answer.

[BadgerDave]

The ratings fluctuate. It looks like the low rating was calculated when your outstanding credit card balance was near your limit - a big negative for the rating agencies.

My understanding is that any credit card balance above 50% of the limit for that card causes a drop in the credit score. A common strategy for big purchases is to split them among cards to ensure that you never go above the 50% mark an any single account.

[fractal]

I'll tell you, but my fee is $9000.

[tmsfo]

The ratings fluctuate. It looks like the low rating was calculated when your outstanding credit card balance was near your limit - a big negative for the rating agencies.

My understanding is that any credit card balance above 50% of the limit for that card causes a drop in the credit score. A common strategy for big purchases is to split them among cards to ensure that you never go above the 50% mark an any single account.

There's a sweet spot (IIRC it's about 30%) between available credit and balances that drives the highest credit rating. That and on time payments are key to keeping the score optimized. The cool thing is that if you keep the balances and payments in line for 6-12 months the creditors start throwing more credit at you which allows you to carry higher balances without your score being affected.

[tommy p]

1. Since that $10,000 was credited back, does my supposed "high average balance" go back to normal and my credit rating go back up?
2. Can I take a check for the positive balance I have on my credit card now or would that keep my credit rating messed up?

Thanks for the info contributed so far. Anybody know the answers to my specific questions?

[cynic]

In terms of balance, credit scores are only affected by the percentage of available credit owed, so a positive balance is no better/different than a negative balance as far as credit scoring goes. Take the check.

All else being equal, once your balance returns to the previous percentage of available credit, your score should rebound. The portion of the credit score that considers balance is a snapshot and history isn't a consideration.