What effect will making a one-time large CC charge have?

[disneysteve]

I'm not particularly concerend since both DW and I both have near-perfect credit scores, (and by near-perfect I mean 849 out of 850) but in the next few weeks, I'm going to be making the largest credit card charge I've ever made in order to pay DD's first college tuition bill. The charge will be for almost 50% of our credit line. Our usual monthly charges are always in the 10% range. I will pay it off right away so no interest or fees to worry about. I won't even wait for the bill to come.

I was just curious what effect this might have on our credit scores - purely curiousity since it really doesn't matter in any way.

[kork13]

I highly doubt that it would be more than a blip. I got married back in early May, so during my April-May statement cycle, I charged something on the order of 40-45% of my credit limit. As it happens, I have 2 credit cards that track my credit score for me every month (free benefit -- woot!)... Over the following months, my credit score has gone from 800 to 795, and is now back at 800.

Bottom line: it's a temporary "surprise" for the FICO scoring model. As long as you pay off the charge in full (which I'm certain you will), any possible decline in your pearly-white FICO score will be reversed within a couple months. More long-term, your credit report WILL perpetually reflect your highest one-time balance. Depending on the credit card company, that might actually trigger a look at your credit to see if you can be offered an even higher credit line (which would probably boost your score).

P.S. Congrats on sending your daughter off! She may or may not recognize it now, but eventually she assuredly will be immensely grateful that you are able to finance her education with only minor contributions on her part (if I remember your plans correctly). I got a full-ride scholarship, but my parents paid my younger brother through college with zero debts, which has been a saving grace for him in the 2 years since he graduated.

[disneysteve]

I highly doubt that it would be more than a blip

Over the following months, my credit score has gone from 800 to 795, and is now back at 800.

That's pretty much what I was expecting.

P.S. Congrats on sending your daughter off! She may or may not recognize it now, but eventually she assuredly will be immensely grateful that you are able to finance her education with only minor contributions on her part (if I remember your plans correctly).

Thanks. Yes, the plans are for college (at least undergrad) to involve minimal student loan debt. I wouldn't say she is making "only minor contributions" though, to be fair to her. She is getting a $19,000/year merit scholarship, so she certainly worked to earn that. Also, she receives a $600/month annuity payment from a legal settlement and she will be contributing $400/month from that toward college expenses plus using some of the rest for incidental day-to-day spending.

[Drake3287]

I've been paying for my 3 kids college costs with a credit card since day one without any problems. I'm also in the 800 Club like you. Don't pass up those rewards!

[disneysteve]

I've been paying for my 3 kids college costs with a credit card since day one without any problems. I'm also in the 800 Club like you. Don't pass up those rewards!

For sure! That's why I'm doing it. I'll use our Marriott Visa card and earn lots of points toward our hotel stays.

[johnt78]

When you look at your credit report you may see just one or two late payments. Maybe these payments were late because of an oversight or because of a one-time financial problem that has since been resolved.

[snafu]

Congratulations on getting DD settled at university! I hope you'll let us know if CC is anything other than a temporary blip. I doubt that mini, short term reduction would change anything no matter what you bought, transferred, ordered.

[sblatner]

Are you not charged fees for using a credit card? I wish we could do that but don't want to pay fees.

[bigdaddybus]

I monthly charge 50% of the limit on my favorite credit card, I pay it off every 2 weeks, havent ever paid interest to them, and my credit score was 841 the last I checked.

I assume you will see no impact to your scores, if you do I wouldnt think it would be more than 5 pts or so.

[disneysteve]

Are you not charged fees for using a credit card? I wish we could do that but don't want to pay fees.

Nope. No fee for paying by credit. That's why I wanted to take advantage of it.

[ua_guy]

I'm guessing you won't see much change.

But, now I'm interested. Please report back if you're able to monitor your credit score over the next month or two.

[disneysteve]

I'm guessing you won't see much change.

But, now I'm interested. Please report back if you're able to monitor your credit score over the next month or two.

I'll have to use my Discover card since they give me my score for free. Otherwise I'll have no way of knowing.

[sblatner]

That's great. I just checked and we can't even use a credit card. Missing out on a lot of points!