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karthikus

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Credit score intricacies - Payment, number of accounts
1. I usually pay off my credit balance as soon as it is recorded . Should I pay off my credit card bills only after my account statement is generated on the due date ?
2. I recently opened Macys store credit card + CITI credit Karma and another auto loan that drastically dropped my score from 740 to 690. Any realistic ways of improving the score ?

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Higher scores take longer to rebuild

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To answer your direct questions....

1) Most credit advisors will tell you that you want to have your credit card utilization target set to about 10% of your total credit limit.  However I will tell you that 9% is my goal each month.  To achieve this you MUST let some of the credit charge balances show up on your billing statements.  Meaning if your credit limit is $100, you need to have a balance of $9 when your bill prints.  So using the card to pay for items is okay, so long as you pay down the amount before your bill is printed.  And if your card doesn’t charge interest until so many days after your bill prints, you can avoid interest charges simply by paying the 9% off before you actual due date.

2) Opening new account will typically drop your score as a result of the credit inquiry and your overall age of accounts.  However, after about 6 months (shorter in some cases) the points you lost in the application process and new accounts will be washed away with a good on-time payment history and your score will begin to improve again.... in most cases even higher than you were in the first place. Because you now have more credit diversity, number of accounts reporting in a positive manner, and the average age of accounts will begin to improve.

Just understand that once your score is over 700 points the amount of time it takes to recover points is slower than if it were already a lower score; i.e., if your score was 500, it would go up much faster.

Please thumbs up if this helps, and look at some of my past answers to help with other credit questions you may still have.

Top Contributor
179 Contributions
333 People Helped

Hihgher scores take longer to rebuild

Helpful to 1 out of 2 people

To answer your direct questions....

1) Most credit advisors will tell you that you want to have your credit card utilization target set to about 10% of your total credit limit.  However I will tell you that 9% is my goal each month.  To achieve this you MUST let some of the credit charge balances show up on your billing statements.  Meaning if your credit limit is $100, you need to have a balance of $9 when your bill prints.  So using the card to pay for items is okay, so long as you pay down the amount before your bill is printed.  And if your card doesn’t charge interest until so many days after your bill prints, you can avoid interest charges simply by paying the 9% off before you actual due date.

2) Opening new account will typically drop your score as a result of the credit inquiry and your overall age of accounts.  However, after about 6 months (shorter in some cases) the points you lost in the application process and new accounts will be washed away with a good on-time payment history and your score will begin to improve again.... in most cases even higher than you were in the first place. Because you now have more credit diversity, number of accounts reporting in a positive manner, and the average age of accounts will begin to improve.

Just understand that once your score is over 700 points the amount of time it takes to recover points is slower than if it were already a lower score; i.e., if your score was 500, it would go up much faster.

Please thumbs up if this helps, and look at some of my past answers to help with other credit questions you may still have.

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