Why did my Credit Score drop 23 points after I paid my mortgage in full?

[Anonymous]

Hello all,

My Equifax went from 628 to 605 after I paid my mortgage ($55,280) in full after receiving a large settlement.  Is this normal?

[Anonymous]

Porbably because you made an "open" credit account now show as "closed". That will drop your score a bit even though you did nothing wrong.

[bdhu2001]

You probably messed up your mix of credit.  Was it your only installment loan.  You usually need two, but having none hurts more. Use the shared loan approach to get your points back.  They should bounce back relatively quickly.

[Pway]

Yes it is normal.  You are dinged for paying off a mortgage or car loan because they are no longer in the installment mix.  The loan is paid in full.   This is the crazy credit game we all play.  It seems like we should be rewarded instead of being penalized for paying balances off.

[IncrsCreditScore1]

---

@Anonymous wrote:

Hello all,

My Equifax went from 628 to 605 after I paid my mortgage ($55,280) in full after receiving a large settlement.  Is this normal?

---

Sadly, that is the way those stupid credit scores swing.  However, don't feel bad about it.  I have no mortgage loan and no car loan and my current score is in the high 700s.  Just keep on paying bills on time, use credit judiciously, and never be late with a payment.  And, if you don't need any more credit cards, don't apply for any.  Your scores will creep back up.

Also, be careful about asking for credit limit increases from Barclay and Chase, they always do hard pulls which also effect your credit score.   For any other credit limit increase requests, make sure they are soft pulls only.  Soft pulls don't show on credit reports and don't effect credit scores negatively.

[Anonymous]

Thank you for the information.  It all makes sense now.