Large emergency expense coming in

Large emergency expense coming in
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#1

So unfortunately, I have a big expense coming up due to a dental crown and unfortunately, I can’t afford the cost upfront. However, I have my paycheck coming in this Friday and I can put a down payment on my credit card (~150) and pay the rest on Friday. But! This is close to my credit limit (300; I’m building up a new credit account). I’m worried that using this much credit would reflect negatively onto my credit score.

So, is it a good idea to put this cost onto my credit card and pay it off ASAP before my statement is due next month?


#2

Hello, @lopez.anguel312, and welcome to the NerdWallet community. Sorry about the emergency dental expense.

Don’t worry. Credit utilization — the percentage of your available credit that you use — is the one credit score factor that is an easy, quick fix if you have to money to pay down your balance. Creditors typically report your usage as the amount on your statement. So, yes, paying it off before it is on your statement is likely to keep it off your credit report.

But don’t worry. Even if it damages your credit, that damage is easily reversed with a big payment. (And really, credit is there to serve you, not the other way around. You have an emergency expense and you have a credit card that will cover it. So, good!)

Once you take care of the immediate crisis, you can start keeping the balance low (under 10% is ideal if you are trying to build your score), but no more than 30% if you can avoid it. I would say that with a dental emergency, you can’t. Just pay it off ASAP and don’t worry. I think you’re fine.

Bev


#3

What @Bev said. Hope the procedure is as pain free as possible!

Once the crown is paid off, it would be a great idea to set up an automatic transfer for a few dollars to go from checking to savings every pay period. Even a few hundred bucks can make a big difference. @ajayakumar wrote about this awhile back: