Drop in credit score

[Mdistefano1027]

I am confused because I received an alert that my credit score dropped because of use on my credit card I have had for 3 months.  I only have a $300 limit right now, but will increase if I pay on it on time for 6 months.  I have made 2 payments so far on time, as the 3rd one is not due yet, on time & paid the balance off each time so I am current.  I just charged $70 on it, that I will pay off on time,  so if it is recommended to get a credit card & pay it on time to raise your credit score, why am I being penalized by the drop in points for using it?  I make my other debt payment (car payment) on time each time for the past 2 years (never been late), so I am totally confused.  Can anyone help me understand? Thank you for any responses.

[tagteam]

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@Mdistefano1027 wrote:

Can anyone help me understand? Thank you for any responses.

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One component of your score is your credit utilization rate (or ratio). If that figure is too high, a drop in your score can result.

See https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/

Further, you stated your credit card was issued three months ago, so perhaps the credit check is still factoring (negatively) into your credit score and perhaps the short length of time that you have had the card is also having a slight negative impact. With time, patience, and timely payments, your score will improve.