Paid off closed account with a negative effect?

[Anonymous]

Hi guys. I closed a credit card with a high balance in 2009. I forgot all about it since my wife pays the bill each month. When I was going through my FICO reports, I noticed there was roughly a $600 discrepancy from what I thought my balances were to what was reported. I asked my wife and she said she’s been paying it. I went ahead and just paid it off when I found out. Now, it looks like I dropped between 9-12 points across the reporting agencies for paying it off. How does that happen? I assume they lowered me back in 2009 when I closed he card, now they’re double stamping me when I pay it off? Any thoughts?

[Anonymous]

Paying off a closed account should not in itself cause a score drop.  What can happen is that paying off a credit card can cause certain credit monitoring tools (e.g. myFICO Ultimate) to send you an alert indicating that you paid the card to zero.  At the same time the tool will recalculate your score.  If something else changed on your report since your score was generated (very possible and such changes are often difficult to see) that might well cause a score drop.

When your card reported a zero balance, were all your cards at zero?  Just curious.

[RobertEG]

Unstated in the post is whether the account was being reported as delinquent based on the discrepancy in balances.

Was the minimum payment being made each month, or was the payment less than the min, resulting in a delinquency status?

[Anonymous]

Thanks for the replies guys. The acct was not delinquent ever. Unfortunately it looks like the account, even being closed, was acting as credit that was available. So when I paid it off, it looks like my “available” credit went down even though I couldn’t utilize any of it. Confusing, but I still think I may have been double hit.

[Anonymous]

And I forgot to mention too that my 2 credit cards have a $0 balance on both. As of now it’s only a total available of $1750, but its my start.

[EAJuggalo]

You got hit for having utilization at 0.  Let a balance report on one of your cards this month and you will probably see those points return.