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Dear Liz: Help! In the last year, my credit scores have dropped 30 points. I don’t know why except that my credit reports noted that I used 10 credit cards recently. (I’ve had many dire emergencies lately, but I paid off all my balances as usual.) I’m terrified of more drops. What can I do?

Answer: Build up your emergency fund.

Because you charged your emergencies, you used up more of your available credit. The more of your credit you use, the more negatively your scores tend to react. It doesn’t matter that you paid your balances off each month. What counts is the balances that your credit card issuers report to the credit bureaus, which are typically the balances on your latest statements.

Now, the good news is that your scores probably will recover as soon as you start charging less. But you should take this as a sign that credit cards are a poor substitute for savings. An emergency fund could help you survive life’s inevitable setbacks without having to run to your cards.

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It’s no substitute for an emergency fund, but one trick that often works well is to make two separate payments per month to your credit cards. I typically charge all the incidental and recurring monthly expenses I can to my credit cards (both for convenience and for the rewards), and then pay off the vast majority of the balance a few days before the end of the billing period. Then when the statement arrives, I pay off the remainder. Since the statement balance is what the card issuers typically report to the credit bureaus, it makes it look like I am using just a tiny amount of my credit when I am, in fact, using quite a lot of it. So my FICO scores stay high.

I don’t think all issuers necessarily work this way (some may report your highest balance during the month instead, I’ve heard), but it can work wonders if you’re trying to qualify for a loan or an apartment and still need to use your credit cards during the application process.


In the old days, you often could talk your issuer into raising your limit, making the two-payment approach unnecessary. These days, though, it’s a great way to dramatically reduce your credit utilization on most cards and preserve your scores.