Liz Weston: How long does it take to fix a bad credit score?

Dear Liz: I had a credit score of 836 last week. I’m a business owner and I’m using my company credit card to pay bills for a large project to get 2% cash back. I charged $52,000 of the $70,000 I have on this card. (I have about $175,000 available on the three business cards I have) and my credit score is down to 699!

I pay my cards within days of receiving my statements. Is this a misuse of my cards? How long do you think it will take to get my score back? Side note: I no longer need credit, but my commercial line of credit is about to expire and I am buying a new truck in two months. Do you think that will be a problem?

Answer: Lower scores could cause you to pay more for credit, so it’s worth addressing this issue quickly.

There’s nothing wrong with using your cards for rewards, as long as you pay your balances in full and don’t use too much of your available credit. Ideally, you would use less than 10% of the limit on any card at any given time. (Credit scoring formulas pay special attention to the amount of credit you use on each revolving account as well as how much of your available credit you use overall.)

If you need to use more of your credit limit, consider making more than one payment per month. Some people make payments every two weeks or even weekly to keep their balance low.

(The balances that count towards your scores are usually the amounts you owe as of your statement closing date.)

Credit card issuers typically report to the credit bureaus monthly, so it shouldn’t take more than 30 days for lower balances to improve your scores.

It’s a little unusual, however, for a business credit card to affect your personal credit scores. Typically, business accounts don’t show up on your credit reports, even if you used your personal credit history to apply for the cards. You may wish to remove your three credit reports from AnnualCreditReport.com to see if other issues may have contributed to your lower score.

Liz Weston, Certified Financial Planner, is a personal finance columnist for Nerd Wallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.

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