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UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-21286

Name of Fund: BlackRock Credit Allocation Income Trust II, Inc. (PSY)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock
Credit Allocation Income Trust II, Inc., 55 East 52nd Street, New York, NY 10055.

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 10/31/2010

Date of reporting period: 07/31/2010

Item 1 – Schedule of Investments


Schedule of Investments July 31, 2010 (Unaudited)

  Par   
Corporate Bonds  (000)  Value 
Aerospace & Defense — 2.9%     
BE Aerospace, Inc., 8.50%,     
7/01/18  $ 2,500  $ 2,718,750 
Bombardier, Inc., 7.75%,     
3/15/20 (a)  3,205  3,453,387 
United Technologies Corp., 5.70%,     
4/15/40  6,250  6,987,869 
    13,160,006 
Airlines — 0.6%     
Continental Airlines Pass-Through     
Certificates, Series 2009-2,     
Class B, 9.25%, 5/10/17  1,625  1,710,312 
Delta Air Lines, Inc., Series 02G1,     
6.72%, 7/02/24  1,279  1,224,739 
    2,935,051 
Auto Components — 0.6%     
Icahn Enterprises LP:     
7.75%, 1/15/16  880  882,200 
8.00%, 1/15/18  2,000  1,995,000 
    2,877,200 
Beverages — 0.4%     
Constellation Brands, Inc., 7.25%,     
5/15/17  1,970  2,048,800 
Building Products — 0.1%     
Building Materials Corp. of     
America, 7.00%, 2/15/20 (a)  525  528,938 
Capital Markets — 0.8%     
Ameriprise Financial, Inc., 5.30%,     
3/15/20  3,250  3,475,794 
Chemicals — 0.3%     
CF Industries, Inc., 7.13%,     
5/01/20  1,125  1,200,938 
Commercial Services &     
Supplies — 3.0%     
Browning-Ferris Industries, Inc.,     
7.40%, 9/15/35  3,742  4,479,372 
Clean Harbors, Inc., 7.63%,     
8/15/16  1,460  1,507,450 
Corrections Corp. of America,     
7.75%, 6/01/17  3,375  3,602,813 
Waste Management, Inc., 6.13%,     
11/30/39  4,000  4,282,256 
    13,871,891 
Communications Equipment — 0.9%     
Brocade Communications Systems,     
Inc., 6.88%, 1/15/20 (a)  2,965  3,031,712 

 

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
(Percentages shown are based on Net Assets)

    Par   
Corporate Bonds    (000)  Value 
Communications Equipment (concluded)     
CC Holdings GS V LLC, 7.75%,       
5/01/17 (a)  $ 935  $ 1,021,488 
      4,053,200 
Consumer Finance — 4.0%       
Capital One Bank USA NA, 8.80%,       
7/15/19    3,325  4,232,449 
Inmarsat Finance Plc, 7.38%,       
12/01/17 (a)    2,135  2,188,375 
SLM Corp., 4.00%, 7/25/14 (b)    13,900  11,759,122 
      18,179,946 
Containers & Packaging — 1.1%       
Ball Corp.:       
7.13%, 9/01/16    1,750  1,881,250 
6.75%, 9/15/20    2,210  2,320,500 
Owens-Brockway Glass Container,       
Inc., 6.75%, 12/01/14    570  579,975 
Rock-Tenn Co., 9.25%, 3/15/16    325  353,031 
      5,134,756 
Diversified Financial       
Services — 0.6%       
GMAC, Inc., 8.30%, 2/12/15 (a)    2,500  2,631,250 
Diversified Telecommunication       
Services — 4.1%       
AT&T Inc., 6.30%, 1/15/38    4,000  4,452,260 
New Communications Holdings,       
Inc., 8.50%, 4/15/20 (a)    3,100  3,309,250 
Qwest Corp., 8.38%, 5/01/16    2,795  3,179,313 
Verizon Communications, Inc.,       
7.35%, 4/01/39    4,025  5,080,745 
Windstream Corp.:       
8.63%, 8/01/16    1,000  1,042,500 
7.88%, 11/01/17    1,900  1,933,250 
      18,997,318 
Electric Utilities — 1.7%       
Progress Energy Inc., 7.00%,       
10/30/31    4,000  4,861,900 
Southern California Edison Co.,       
5.50%, 3/15/40    2,850  3,117,016 
      7,978,916 
Electronic Equipment, Instruments       
& Components — 0.2%       
Jabil Circuit Inc., 8.25%, 3/15/18    800  872,000 
Energy Equipment &       
Services — 2.2%       
Compagnie Generale de       
Geophysique-Veritas, 7.75%,       
5/15/17    1,175  1,145,625 

 

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated
according to the following list:

GO  General Obligation Bonds  TBD  To be determined 
RB  Revenue Bonds     

 

BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.

JULY 31, 2010

1


Schedule of Investments(continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
(Percentages shown are based on Net Assets)

  Par   
Corporate Bonds  (000)  Value 
Energy Equipment & Services     
(concluded)     
Halliburton Co., 7.45%, 9/15/39  $ 6,220  $ 7,927,004 
Hornbeck Offshore Services, Inc.,     
Series B, 6.13%, 12/01/14  1,000  897,500 
    9,970,129 
Food & Staples Retailing — 3.5%     
CVS Caremark Corp., 6.30%,     
6/01/62 (b)  6,600  6,072,000 
Wal-Mart Stores, Inc.:     
5.25%, 9/01/35  2,500  2,603,280 
6.20%, 4/15/38  6,250  7,325,531 
    16,000,811 
Food Products — 1.0%     
Kraft Foods, Inc.:     
6.50%, 8/11/17  1,665  1,963,406 
6.13%, 8/23/18  1,660  1,930,552 
Smithfield Foods, Inc., 10.00%,     
7/15/14 (a)  700  782,250 
    4,676,208 
Gas Utilities — 1.0%     
Nisource Finance Corp., 6.13%,     
3/01/22  4,000  4,402,764 
Health Care Equipment &     
Supplies — 0.8%     
Fresenius US Finance II, Inc.,     
9.00%, 7/15/15 (a)  2,250  2,520,000 
Medtronic, Inc.:     
6.50%, 3/15/39  650  799,791 
5.55%, 3/15/40  412  458,449 
    3,778,240 
Health Care Providers &     
Services — 3.4%     
Aetna, Inc., 6.75%, 12/15/37  3,400  3,854,689 
HCA, Inc.:     
8.50%, 4/15/19  1,800  1,989,000 
7.25%, 9/15/20 (c)  2,550  2,696,625 
Tenet Healthcare Corp. (a):     
10.00%, 5/01/18  1,530  1,738,462 
8.88%, 7/01/19  1,125  1,237,500 
UnitedHealth Group, Inc., 6.88%,     
2/15/38  3,400  3,946,360 
    15,462,636 
Household Durables — 0.3%     
Cemex Espana Luxembourg,     
9.25%, 5/12/20 (a)  1,462  1,312,145 
Insurance — 4.7%     
Liberty Mutual Group, Inc., 6.70%,     
8/15/16 (a)  1,265  1,319,339 
Lincoln National Corp., 6.25%,     
2/15/20  3,400  3,628,341 
Northwestern Mutual Life     
Insurance, 6.06%, 3/30/40 (a)  3,800  4,232,592 
Principal Financial Group, Inc.,     
8.88%, 5/15/19  980  1,224,092 
Prudential Financial, Inc., 6.63%,     
12/01/37  3,400  3,645,065 
QBE Insurance Group Ltd., 9.75%,     
3/14/14 (a)  5,967  7,233,358 

 

  Par   
Corporate Bonds  (000)  Value 
Insurance (concluded)     
Structured Asset Repackaged     
Trust, Series 2004-1, 0.78%,     
4/21/11 (a)(b)  $ 161  $ 158,213 
    21,441,000 
Life Sciences Tools &     
Services — 1.9%     
Bio-Rad Laboratories, Inc., 8.00%,     
9/15/16  3,825  4,092,750 
Life Technologies Corp., 6.00%,     
3/01/20  4,200  4,630,529 
    8,723,279 
Machinery — 1.5%     
Ingersoll-Rand Global Holding Co.,     
Ltd., 9.50%, 4/15/14  3,400  4,199,728 
Navistar International Corp.,     
8.25%, 11/01/21  2,550  2,696,625 
    6,896,353 
Media — 7.9%     
CSC Holdings LLC:     
8.50%, 6/15/15  1,500  1,614,375 
8.63%, 2/15/19  1,200  1,311,000 
Comcast Corp., 6.30%, 11/15/17  3,400  3,934,324 
Cox Communications, Inc., 8.38%,     
3/01/39 (a)  3,400  4,555,231 
DISH DBS Corp.:     
7.00%, 10/01/13  1,750  1,820,000 
7.88%, 9/01/19  1,100  1,168,750 
Gannett Co., Inc., 9.38%,     
11/15/17 (a)  1,800  1,953,000 
Intelsat Corp., 9.25%, 6/15/16  1,800  1,921,500 
News America, Inc., 6.15%,     
3/01/37  4,200  4,421,260 
Time Warner Cable, Inc., 6.75%,     
6/15/39  4,050  4,612,436 
Time Warner, Inc., 7.70%,     
5/01/32  4,150  5,071,333 
UPC Germany GmbH, 8.13%,     
12/01/17 (a)  1,030  1,053,175 
Virgin Media Secured Finance Plc,     
6.50%, 1/15/18 (a)  2,675  2,768,625 
    36,205,009 
Metals & Mining — 1.5%     
AK Steel Corp., 7.63%, 5/15/20  1,000  1,003,750 
Phelps Dodge Corp., 7.13%,     
11/01/27  2,900  3,140,401 
Teck Resources Ltd., 10.75%,     
5/15/19  1,750  2,185,400 
United States Steel Corp., 7.38%,     
4/01/20  375  375,938 
    6,705,489 
Multi-Utilities — 1.6%     
CenterPoint Energy, Inc.:     
5.95%, 2/01/17  3,150  3,412,571 
6.50%, 5/01/18  3,350  3,770,328 
    7,182,899 

 

2 BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC. JULY 31, 2010


Schedule of Investments(continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
(Percentages shown are based on Net Assets)

  Par   
Corporate Bonds  (000)  Value 
Multiline Retail — 2.8%     
Dollar General Corp., 10.63%,     
7/15/15  $ 3,275  $ 3,602,500 
JC Penney Co., Inc., 5.65%,     
6/01/20  9,000  9,045,000 
    12,647,500 
Oil, Gas & Consumable     
Fuels — 4.2%     
BP Capital Markets Plc, 3.88%,     
3/10/15  1,500  1,433,939 
Chesapeake Energy Corp., 6.25%,     
1/15/18  950  971,375 
Enbridge Energy Partners LP,     
9.88%, 3/01/19  2,100  2,822,969 
Enterprise Products Operating LLC,     
6.65%, 4/15/18  4,200  4,871,227 
Kinder Morgan Energy Partners LP,     
6.85%, 2/15/20  4,200  4,975,954 
ONEOK Partners LP, 8.63%,     
3/01/19  3,400  4,358,555 
    19,434,019 
Paper & Forest Products — 2.5%     
Georgia-Pacific LLC, 8.25%,     
5/01/16 (a)  3,400  3,689,000 
International Paper Co.:     
7.50%, 8/15/21 (c)  3,325  3,988,697 
7.30%, 11/15/39  3,400  3,896,740 
    11,574,437 
Pharmaceuticals — 9.2%     
Abbott Laboratories:     
6.15%, 11/30/37  588  693,020 
6.00%, 4/01/39  5,891  6,842,420 
Bristol-Myers Squibb Co.:     
5.88%, 11/15/36  5,000  5,627,660 
6.13%, 5/01/38  1,471  1,717,735 
Eli Lilly & Co., 5.95%, 11/15/37  1,471  1,684,204 
GlaxoSmithKline Capital, Inc.,     
6.38%, 5/15/38  7,250  8,724,991 
Merck & Co., Inc., 6.50%,     
12/01/33 (c)  2,070  2,528,192 
Pfizer, Inc., 7.20%, 3/15/39 (c)  6,250  8,389,262 
Schering-Plough Corp., 6.55%,     
9/15/37  4,572  5,715,366 
    41,922,850 
Real Estate Investment Trusts     
(REITs) — 2.5%     
AvalonBay Communities, Inc.,     
6.10%, 3/15/20  3,400  3,846,797 
ERP Operating LP:     
5.38%, 8/01/16  3,350  3,637,199 
5.75%, 6/15/17  3,405  3,763,908 
    11,247,904 
Semiconductors & Semiconductor     
Equipment — 1.2%     
Advanced Micro Devices, Inc.,     
7.75%, 8/01/20 (a)(d)  775  782,750 
KLA-Tencor Corp., 6.90%,     
5/01/18  1,928  2,157,684 

 

  Par   
Corporate Bonds  (000)  Value 
Semiconductors & Semiconductor     
Equipment (concluded)     
National Semiconductor Corp.,     
6.60%, 6/15/17  $ 2,334  $ 2,633,436 
    5,573,870 
Specialty Retail — 1.0%     
AutoNation, Inc., 6.75%, 4/15/18  1,965  1,979,738 
AutoZone, Inc., 7.13%, 8/01/18  1,350  1,604,622 
Limited Brands, Inc., 7.00%,     
5/01/20  980  1,011,850 
    4,596,210 
Tobacco — 3.3%     
Altria Group, Inc.:     
9.70%, 11/10/18  3,400  4,454,537 
9.25%, 8/06/19  3,350  4,310,204 
10.20%, 2/06/39  4,400  6,214,472 
    14,979,213 
Wireless Telecommunication     
Services — 4.2%     
Cricket Communications, Inc.,     
7.75%, 5/15/16  670  693,450 
Nextel Communications, Inc.,     
Series E, 6.88%, 10/31/13  2,340  2,328,300 
SBA Tower Trust, 5.10%,     
4/15/42 (a)  15,225  16,286,957 
    19,308,707 
Total Corporate Bonds – 83.5%    381,987,676 
Preferred Securities     
Capital Trusts     
Capital Markets — 4.0%     
Ameriprise Financial, Inc., 7.52%,     
6/01/66 (b)  2,500  2,437,500 
Lehman Brothers Holdings Capital     
Trust V, 2.09% (e)(f)(g)  6,400  640 
State Street Capital Trust III,     
8.25% (b)(f)  2,920  2,963,654 
State Street Capital Trust IV,     
1.54%, 6/01/67 (b)  18,235  12,661,417 
    18,063,211 
Commercial Banks — 6.1%     
Bank One Capital III, 8.75%,     
9/01/30  2,000  2,357,968 
Barclays Bank Plc, 5.93% (a)(b)(f)  2,500  2,106,250 
First Empire Capital Trust II,     
8.28%, 6/01/27  3,630  3,349,002 
HSBC Capital Funding LP/Jersey     
Channel Islands,     
10.18% (a)(b)(f)  4,835  6,019,575 
National City Preferred Capital     
Trust I, 12.00% (b)(f)  1,100  1,222,430 
NationsBank Capital Trust III,     
0.83%, 1/15/27 (b)  13,470  9,036,794 
SunTrust Preferred Capital I,     
5.85% (b)(f)  307  205,690 

 

BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC. JULY 31, 2010 3


Schedule of Investments(continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
(Percentages shown are based on Net Assets)

    Par   
Capital Trusts    (000)  Value 
Commercial Banks (concluded)       
USB Capital XIII Trust, 6.63%,       
12/15/39  $ 3,500  $ 3,665,480 
      27,963,189 
Consumer Finance — 0.8%       
Capital One Capital V, 10.25%,       
8/15/39    3,190  3,453,175 
Diversified Financial       
Services — 1.6%       
Farm Credit Bank of Texas,       
Series 1, 7.56% (b)(f)    2,500  2,071,350 
JPMorgan Chase Capital XXIII,       
1.44%, 5/15/77 (b)    7,500  5,366,535 
      7,437,885 
Electric Utilities — 0.6%       
PPL Capital Funding, 6.70%,       
3/30/67 (b)    3,000  2,677,500 
Insurance — 12.2%       
AXA SA, 6.38% (a)(b)(f)    3,000  2,385,000 
Ace Capital Trust II, 9.70%, 4/01/30  5,000  6,074,680 
The Allstate Corp., 6.50%, 5/15/67 (b)  5,000  4,575,000 
Aon Corp., 8.21%, 1/01/27    2,500  2,626,250 
Chubb Corp., 6.38%, 3/29/67 (b)(h)  2,000  1,950,000 
Farmers Exchange Capital, 7.05%,     
7/15/28 (a)    2,500  2,333,940 
GE Global Insurance Holding Corp.,     
7.75%, 6/15/30    2,000  2,248,394 
Liberty Mutual Group, Inc., 10.75%,     
6/15/88 (a)(b)    2,925  3,202,875 
Lincoln National Corp., 7.00%,       
5/17/66 (b)    3,350  3,029,740 
MetLife, Inc., 6.40%, 12/15/66    6,825  6,330,187 
Nationwide Life Global Funding I,       
6.75%, 5/15/67    7,000  5,613,300 
Principal Life Insurance Co., 8.00%,     
3/01/44 (a)    2,500  2,581,155 
Reinsurance Group of America, 6.75%,     
12/15/65 (b)    3,000  2,530,902 
The Travelers Cos., Inc., 6.25%,       
3/15/67 (b)    3,000  2,843,217 
ZFS Finance (USA) (a)(b):       
Trust IV, 5.88%, 5/09/32    379  337,265 
Trust V, 6.50%, 5/09/67    4,312  3,923,920 
Zenith National Insurance Capital       
Trust I, 8.55%, 8/01/28 (a)    3,750  3,225,000 
      55,810,825 
Multi-Utilities — 1.4%       
Dominion Resources Capital       
Trust I, 7.83%, 12/01/27    2,500  2,634,515 
Dominion Resources, Inc., 7.50%,       
6/30/66 (b)    3,900  3,885,375 
      6,519,890 
Oil, Gas & Consumable       
Fuels — 1.2%       
Enterprise Products Operating LLC,     
8.38%, 8/01/66 (b)    2,000  2,037,500 

 

    Par   
Capital Trusts    (000)  Value 
Oil, Gas & Consumable Fuels (concluded)     
TransCanada PipeLines Ltd.,       
6.35%, 5/15/67 (b)  $ 4,000  $ 3,640,000 
      5,677,500 
Road & Rail — 0.8%       
BNSF Funding Trust I, 6.61%,       
12/15/55 (b)    3,750  3,581,250 
Total Capital Trusts – 28.7%      131,184,425 
Preferred Stocks    Shares   
Commercial Banks — 1.6%       
First Tennessee Bank NA,       
3.75% (a)(b)    4,650  3,263,719 
Provident Financial Group, Inc.,       
7.75%    166,800  4,164,796 
      7,428,515 
Diversified Financial       
Services — 1.1%       
Falcons Funding Trust I,       
8.88% (a)(b)    4,750  4,883,594 
Insurance — 1.2%       
Aspen Insurance Holdings Ltd.,       
7.40%    144,881  3,230,846 
Axis Capital Holdings Ltd., Series B,       
7.50%    10,240  883,200 
Prudential Plc, 6.50%    60,000  1,458,600 
      5,572,646 
Wireless Telecommunication       
Services — 0.6%       
Centaur Funding Corp., 9.08%    2,423  2,562,322 
Total Preferred Stocks – 4.5%      20,447,077 
Trust Preferreds       
Insurance — 0.5%       
W.R. Berkley Capital Trust II,       
6.75%, 7/26/45 (i)    104,976  2,527,822 
Total Trust Preferreds – 0.5%      2,527,822 
Total Preferred Securities – 33.7%      154,159,324 
    Par   
Taxable Municipal Bonds    (000)   
Metropolitan Transportation       
Authority, RB, Build America       
Bonds, 6.55%, 11/15/31  $ 3,450  3,552,431 
State of California, GO, Build       
America Bonds, 7.35%,       
11/01/39    1,725  1,810,129 

 

4 BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC. JULY 31, 2010


Schedule of Investments(continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
(Percentages shown are based on Net Assets)

    Par   
Taxable Municipal Bonds (concluded)  (000)  Value 
State of Illinois, GO, Pension,       
5.10%, 6/01/33  $ 3,475  $ 2,834,453 
Total Taxable Municipal Bonds – 1.8%    8,197,013 
U.S. Treasury Obligations       
U.S. Treasury Notes — 15.4%       
U.S. Treasury Notes, 1.75%,       
7/31/15    70,000  70,513,800 
Total U.S. Treasury Obligations – 15.4%    70,513,800 
Total Long-Term Investments       
(Cost – $614,416,141) – 134.4%      614,857,813 
Short-Term Securities    Shares   
BlackRock Liquidity Funds,       
TempFund, Institutional Class,       
0.23% (j)(k)    82,886,485  82,886,485 
Total Short-Term Securities       
(Cost – $82,886,485) – 18.1%      82,886,485 
Total Investments       
(Cost – $697,302,626*) – 152.5%    697,744,298 
Liabilities in Excess of Other Assets – (15.5)%  (71,074,054) 
Preferred Shares, at Redemption Value – (37.0)%  (169,082,397) 
Net Assets Applicable to Common Shares – 100.0%  $ 457,587,847 

 

*  The cost and unrealized appreciation (depreciation) of investments as of 
  July 31, 2010, as computed for federal income tax purposes, were as 
  follows:   
  Aggregate cost  $ 700,475,121 
  Gross unrealized appreciation  $ 21,516,554 
  Gross unrealized depreciation  (24,247,377) 
  Net unrealized depreciation  $ (2,730,823) 

 

(a) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration to qualified institutional investors.
(b) Variable rate security. Rate shown is as of report date.
(c) All or a portion of security has been pledged as collateral in connection
with open reverse repurchase agreements.
(d) When-issued security. Unsettled when-issued transactions were as
follows:

    Unrealized 
Counterparty  Value  Appreciation 
JPMorgan Securities, Ltd.  $ 782,750   $ 7,750 

 

(e) Issuer filed for bankruptcy and/or is in default of interest payments.
(f) Security is perpetual in nature and has no stated maturity date.
(g) Non-income producing security.
(h) All or a portion of security has been pledged as collateral in connection
with swaps.
(i) Convertible security.

(j) Investments in companies considered to be an affiliate of the Trust
during the period, for purposes of Section 2(a)(3) of the Investment
Company Act of 1940, as amended, were as follows:

  Shares Held    Shares Held   
  at October 31,  Net  at July 31,   
Affiliate  2009  Activity  2010  Income 
BlackRock         
Liquidity Funds,         
TempFund,         
Institutional         
Class  41,019,397  41,867,088    82,886,485  $ 100,606 
(k) Represents the current yield as of report date.     

 

• For Trust compliance purposes, the Trust's industry classifications refer
to any one or more of the industry sub-classifications used by one or
more widely recognized market indexes or rating group indexes, and/or
as defined by Trust management. This definition may not apply for
purposes of this report, which may combine such industry sub-
classifications for reporting ease.

BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC. JULY 31, 2010 5


Schedule of Investments(continued) BlackRock Credit Allocation Income Trust II, Inc. (PSY)

• Reverse repurchase agreements outstanding as of July 31, 2010 were as follows:   
  Interest  Trade  Maturity  Net Closing  Face 
Counterparty  Rate  Date  Date  Amount  Amount 
Credit Suisse Securities LLC  0.35%  5/04/10  TBD  $ 2,317,580   $ 2,315,554 
Royal Bank of Scotland Plc  0.36%  5/06/10  TBD  7,330,195  7,323,750 
Credit Suisse Securities LLC  0.25%  5/13/10  TBD  3,569,732  3,567,725 
Credit Suisse Securities LLC  0.40%  5/13/10  TBD  2,348,749  2,346,637 
Total        $ 15,566,256  $ 15,553,666 

 

• Financial futures contracts purchased as of July 31, 2010 were as follows:   
    Expiration  Notional  Unrealized 
Contracts  Issue  Date  Value  Appreciation 
20  30-Year U.S. Treasury Bond  September 2010   $ 2,450,785   $ 86,715 

 

•  Credit default swaps on single-name issues - buy protection outstanding as of July 31, 2010 were as follows:     
    Pay      Notional   
    Fixed      Amount  Unrealized 
  Issuer  Rate  Counterparty  Expiration  (000)  Depreciation 
  Nordstrom, Inc.  5.20%  Deutsche Bank AG  June 2014  $ 2,000 $  (320,410) 

 

•Fair Value Measurements - Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

•Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

•Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices
for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or
liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-
corroborated inputs)

•Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available
(including the Trust's own assumptions used in determining the fair value of investments and derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For
information about the Trust's policy regarding valuation of investments and derivatives and other significant accounting policies, please refer to the
Trust’s most recent financial statements as contained in its semi-annual report.

The following tables summarize the inputs used as of July 31, 2010 in determining the fair valuation of the Trust's investments and derivatives:

Valuation Inputs  Level 1  Level 2  Level 3  Total 
Assets:         
Investment in Securities:         
Long-term Investments:         
Corporate Bonds  -  $ 381,829,463  $ 158,213  $ 381,987,676 
Preferred Securities  $ 11,382,064  142,777,260  -  154,159,324 
Taxable Municipal Bonds…  -  8,197,013  -  8,197,013 
U.S. Treasury Obligations…  -  70,513,800  -  70,513,800 
Short-Term Securities  82,886,485  -  -  82,886,485 
Total  $ 94,268,549  $ 603,317,536  $ 158,213  $ 697,744,298 

 

Derivative Financial Instruments1
Valuation Inputs  Level 1  Level 2  Level 3  Total 
Assets:         
Interest rate contracts  $ 86,715  —  —   $ 86,715 
Liabilities:         
Credit contracts  —   $ (320,410)  —  (320,410) 
Total  $ 86,715   $ (320,410)  —   $ (233,695) 
1 Derivative financial instruments are financial futures contracts and swaps which are valued at the 
unrealized appreciation/depreciation on the instrument.       

 

6 BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC. JULY 31, 2010


Schedule of Investments(concluded) BlackRock Credit Allocation Income Trust II, Inc. (PSY)

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used 
to determine fair value:         
    Corporate  Preferred   
  Capital Trusts  Bonds  Stocks  Total 
Assets/Liabilities:         
Balance, as of         
October 31, 2009  $ 2,271,150  $ 266,121  $13,800,000  $ 16,337,271 
Accrued         
discounts/premiums  -  -  -  - 
Net realized gain (loss)  (614,833)  43  -  (614,790) 
Net change in unrealized         
appreciation/depreciation2  1,308,795  29,620  5,656,562  6,994,977 
Purchases  -  -  -  - 
Sales  (2,965,112)  (137,571)  -  (3,102,683) 
Transfers in3  -  -  -  - 
Transfers out3  -  -  (19,456,562)  (19,456,562) 
Balance, as of         
July 31, 2010  -  $ 158,213  -  $ 158,213 
2 The change in unrealized appreciation/depreciation on securities still held at July 31, 2010 was $6,994,977. 
3 The Portfolio’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the 
change in circumstances that caused the transfer.       

 

BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC. JULY 31, 2010 7


Item 2 – Controls and Procedures

2(a) – The registrant's principal executive and principal financial officers or persons performing
similar functions have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the
“1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the
evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act
and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

2(b) – There were no changes in the registrant's internal control over financial reporting (as defined
in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter
that have materially affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.

Item 3 – Exhibits

Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

BlackRock Credit Allocation Income Trust II, Inc.

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer of
BlackRock Credit Allocation Income Trust II, Inc.

Date: September 27, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer (principal executive officer) of
BlackRock Credit Allocation Income Trust II, Inc.

Date: September 27, 2010

By: /s/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Credit Allocation Income Trust II, Inc.

Date: September 27, 2010