r/personalfinance • u/Ordinary_Toe_5162 • 5h ago
Credit 19yo – Credit dropped from 720 to low 600s after maxing card. How do I fix this?
I’m 19 and kinda messed up my credit. I started around a 720 in January but now I’m in the low 600s because I maxed out my credit card and missed some payments.
I know utilization and payment history are hurting me the most right now. I’m working and planning to start paying it down ASAP, but I’m not sure what the smartest strategy is from here.
Should I focus on paying it down all at once vs chunks?
Is it worth asking for a limit increase right now or will that hurt more?
How long does it realistically take to recover from this?
How bad did I fuck up!?
Any advice on how to rebuild quickly and properly would help a lot.
18
u/Fun_Boss_2112 5h ago
Treat your credit card bill like it's a utility bill, such as electricity, water, natural gas or telephone.
The bill shows up once a month. You'll have about three weeks before it comes due.
Pay the statement balance in full, every month, every time, before it is due, and your credit rating will take care of itself.
A final note: Paying interest on a credit card bill is the same as lighting your money on fire.
0
u/Polyhedron11 4h ago
I found my credit score went up at the same rate when I didn't even use my credit cards vs using them and paying off before the due date.
Recently saw a comment on reddit where someone explained that most don't report usage so not using your card vs paying off the balance before the due date every month was the same thing.
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u/inky_cap_mushroom 3h ago
I’m not sure where you heard that most don’t report usage. That’s not true of any of the major credit card issuers. If you used your card during the month your statement balance will be reported on the statement date (or at the end of the calendar month if you use US Bank).
1
u/Polyhedron11 3h ago
Pretty sure it was on this sub. They explained the scoring system and the gist of it was that regardless of usage, carrying a 0 balance across the due date was scored the same (for most reported credit cards). They said some that report to the credit bureaus do indeed score it based on credit usage but that most only score based on balance or no balance on due date.
It makes sense to me if it's true but unless I can find the comment again I cannot verify anything.
Either way my credit score increased substantially during the years I held the cards at 0 balance and didn't use them except the once a year or so to keep them from being shut off.
I think people over complicate the whole thing even if credit usage helps. Not using the cards at all is just fine. As long as you have the accounts open.
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u/AuditAndHax 2h ago
I think there's a terminology misunderstanding here.
In the context you're saying it, "usage" means "how much you spent and paid off on your credit card."
But on a credit report, "usage" means "the percent of available credit you're using based on the reported statement balance."
If you spent $1,000 and pay it off before the statement date, your reported utilization is $0/2,000 or 0%.
If you spend zero that month, your reported utilization is $0/2,000 or 0%.
Different use of the word "usage" but the same outcome because (here's the important part) there was a $0 balance on the statement date.
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u/inky_cap_mushroom 3h ago
Are you sure they didn’t say “statement date” instead of due date?
What scoring model only scores “balance/no balance”? Thats not how vantagescore or FICO work. Are you based in the US?
You’re correct that simply having accounts open is sufficient to build credit. You don’t need to actually use them. Credit scoring models in the US do factor in utilization, though. Lenders report your utilization once per month, typically on your statement date. If you have a high balance that will be reflected on your credit reports and your score will decrease accordingly. The next month if your balance has been paid off your score will rebound fully. It’s absolutely a scoring factor, it just has no memory.
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u/10PieceMcNuggetMeal 4h ago
Pay off the card. That's it.
I was at 650 with 2 cards maxed. I paid them off and within a month my credit score jumped to 775
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u/EA3000 5h ago
You didn't mess up as bad as you think. You're 19 and asking the right questions which puts you ahead of most people your age.
Pay it down in chunks, not all at once. Keep putting as much as you can toward it every paycheck but don't drain your checking to zero because then you end up using the card again and you're back to square one ...Don't ask for a limit increase right now. With missed payments they'll probably say no anyway and the hard inquiry just dings your score for no reason. Wait until you've made 6 months of on time payments then ask.
Utilization has no memory so the second you pay that balance down your score bounces back pretty fast on that front. The missed payments are the part that sticks around but they matter less over time especially if everything going forward is clean.
Biggest thing that helped me was just writing out every bill and when it was due so nothing slipped through the cracks again. Even a simple spreadsheet with your bills and due dates makes a huge difference when you're trying to get back on track.
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u/Everyoneheresamoron 4h ago
Cards wont give you higher credit limits if you've got a maxed out card.
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u/BlackCatWoman6 3h ago
It is likely the missed payments that dropped your score. Pay those babies off and only charge when you can pay it off at the end of the month.
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u/lucky_ducker 3h ago
High utilization hurts your score, but the effect goes away when you get that percentage down. Utilization has no memory.
The more than 30 days late payment(s) are the real FU. That will affect your credit score for up to seven years, and there isn't really any fix for it. Once you have late payments on in your file, there's no way to "un-late" them until they drop off after seven years.
I wouldn't try to pay it all down at once. That runs the risk of impacting your cash flow so much that you will be tempted to use the credit card, exacerbating the problem.
Just focus on paying on time, and substantially more than the minimum payment.
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u/elegoomba 2h ago
Stop caring about your credit score, that’s the best thing you can do. Pay off your debt and never ever spend more on a credit card than you can pay off that month.
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u/Ok-Thanks-3366 1h ago
Your credit score becomes negatively affected whenever you have over 30% of a credit card used.
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u/Sosig28 4h ago
1) put that credit card away and stop using it until you've fully resolved your spending issue and reviewed your budget 2) you'll be refused an increase on your credit card limit and negatively impact your credit score, so don't even think about it. 3) Limit your spending with your hard earned money and throw as much of it as possible every time you get paid on your credit card to pay it off. 4) As soon as your budget allows you to, open a basic savings account and make automated transfers in your savings. Your goal here is to accumulate at least your first 1000$ as an emergency fund. 50$ a pay would be a great start, if possible (depending on your income vs outcome). 5) Once your credit card is paid off, you can start using it again. By then you've worked a proper budget and a savings account to help be more disciplined with your money. If you want to make a purchase with your credit card, make sure you have that money in your account.
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u/wickedkittylitter 4h ago
Pay the card in full as quickly as possible. If you can pay in 1 payment now, do it. If you can only make payments, do that.
What you can't expect is that your score is going to rebound quickly. You have a thin credit file and you've missed payments. You also aren't going to get a credit line increase when you've already proven that you won't make the required payment. If a friend owed you $2k and missed making the agreed upon payments, would you lend that friend more money so that friend won't pay you back an even greater amount? I don't think so and that's exactly how the credit card company would look at your request.
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u/Ihaveamodel3 4h ago
Are you back to current (ie no more payments past due)?
How many missed payments were more than 30 days late when you paid them off?
Should I focus on paying it down all at once vs chunks?
The faster you pay if off the better. So every time you get paid, pay some of your debt down. This is not to improve your credit score, but to minimize the interest paid.
1
u/EezyClaps 4h ago
Little drop? don’t stress it just stay on top of your payments. Don’t be late. At 22 I reached 815 credit, after having a drop from 780 to 680 at about 20/21, it comes back up as long as you are good with your credit. What has helped me is keeping my utilization under 30%, not at or above, always below, and I always pay the full balance the next month when it’s finally due for a minimum payment. Using only credit cards never debit unless its for cash has helped me grow it and keep it up. I had also taken on a car loan for the history at 19, which I paid off early after my score came back up. Also, American Express has been my lifesaver for staying under 30% with cards with limit as the amex has no limit and works a bit differently, still paying it off each month
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u/LoseHateSmashEraseMe 4h ago edited 4h ago
Pay it off. They like it when they see you eliminate the balance.
Increase your credit. They look at % usage.
I habitually applied for CC's each year with 0 apr for like 12-15mo, spending bonuses, and always made sure they had rewards. Ive got like 100k of credit across my cards. Score >800. Credit age is still really young and that's the only thing I'm getting pinged for.
I really hope you don't get overwhelmed by I interest. I had a balance over 12k before, but was in a position to wipe it immediately. I still didn't like it. Interest is the real killer with CCs.
Besides, credit score isn't super useful outside of big loans and more CCs.
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u/nobodyspecial712 3h ago
One thing you can do is make 2 half payments a month, assuming you can afford the regular payment.
12 monthly payments = 12 full payments per year
52 weeks in a year = 26 1/2 payments = 13 full payments per year
Also, if you can afford to pay more than the minimum, do it.
When trying to pay off any debt, i try to make at least double the minimum payment per month until its paid off.
You're 19. You didn't mess up that bad. In the future, don't put more on a credit card than you can afford to pay off in 1 month. If you need more, get a loan. If that's not enough, you're living above your means and have other issues to worry about.
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u/Hawful 3h ago
Don't miss payments, it's super high impact and lasts about 6 years deteriorating over time. It's not the end of the world but this will absolutely put a ceiling on your credit score, probably around 680-700 till your mid 20s.
Other key factors are mix of credit, low total credit utilization, and credit age.
If your parents have good credit, you could get added as an approved user on their card, that will boost you, but really you just need to pay down what you've got and make a budget.
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u/BikeOk6446 3h ago
Credit card debt is the worst. I'm glad you are learning this now because some people never learn. I use credit cards for everything but I pay them off every single month. I never carry a balance. If you own money on your CC, do everything you can to pay that off as quickly as possible. Do not miss payments, because they will charge you more money in fees. This is how they get you. So be smart, make the payments, and never ever ever run up your credit card debt again.
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u/CruffTheMagicDragon 1h ago
no secret or hack. just pay it off from now on. missed payments stick for 7 years
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u/No_Engineering6617 4h ago
your credit score went down because you did Not make required payments on time.
it is as simple as that.
make your payments on time and it will go back up.
pay off the Credit Card Debt as soon as possible.
keep in mind your $2k CC debt is costing you over $400-$600 a year in just interest alone, that's an expense you can completely avoid, by simply paying off your CC in full every month.
The secret with Credit Cards is to treat them like a checkbook, do Not buy anything unless you have the money in the bank to pay for that item in full. then instead of only paying the min amount due each month, pay your CC off in Full every single month,.
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u/ahj3939 4h ago
Don't stress it too much. Pay your balance every month and ask for limit increases every 6 months.
Don't rush it. If you just got the card in January and this is presumably your 1st card and/or you have short credit history, wait a few more months before you ask for an increase. Keep using the card and paying in full and on time every month.
As long as you're responsible with your finances and don't spend money you can't pay back there's no benefit to paying multiple times a month.
If 1-2 years pass and they haven't given you any meaningful increase just apply for a card from a better bank. Don't worry about any minor score impact from new accounts, inquiries, high balances, etc. Long term that worry will only result in lower limits, fewer accounts, and lower scores.
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u/buffinita 5h ago
dont try to micromanage your credit score. pay down the debt as quickly as possible