Paid off a closed Discover Acct

[DoroLucky]

And my Experian score dropped by 1 point. How is this possible? Is it worng to pay off your debt in the eyes of fico scoring? Still waiting to see EQ and TU updates from this. 

[gdale6]

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@Garsue31 wrote:

And my Experian score dropped by 1 point. How is this possible? Is it worng to pay off your debt in the eyes of fico scoring? Still waiting to see EQ and TU updates from this. 

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What happens is the account status date comes current when they report the payoff and that makes the CO look new in the eyes of Fico. A one point drop is nothing to worry about you will regain that point as the paid off account now begins to age. Where you gain in paying off old debt is in manual reviews, underwriters love to see someone take responsibility for past debt and resolve the issue. You are to be congratulated for getting your financial life in order

[DoroLucky]

It's not about the one point drop, it's the principal behind thier madness lol. I was pretty happy about 640 though, 639 looks like a set back

Btw, the acct was never charged off, late but never in CO status. I didn't understand credit and has been making minimum payments for several years (yeah I know lol). Found this forum in November and realized I needed to pay it off and get my credit/finance in order.

Thanks for the feedback.

[DoroLucky]

That acct and 2 of my open TL's all had balances. I've since paid ALL of them to 0. However, I do use the cards (instead of my bank/debit card) and pay them off before the statement closes. Working hard to get that CLI since I'm rebuilding and not app'ing. Want to be over well over 700 before the end of 2015

[DoroLucky]

Equifax took 6 points

[Anonymous]

The small point change was probably just incidental, and not a direct result of the balance change.

[DoroLucky]

It's small but a lot to someone trying to rebuild lol 

the alert I got from myfico says it's the balance change for both EX and EQ, TU has yet to report. 

[Anonymous]

Balance change may have triggered the alert with myfico, but that doesn't mean the balance change is what caused the one point drop. There are lots of things that affect your score that don't even trigger alerts.

During the rebuild process, your scores are going to move through various scoring buckets as things in your files change. Going from one bucket to another often causes unexpected and seemingly illogical changes.

Bottom line is - don't sweat the minor fluctuations, concentrate on the CONTENT of your credit files. Removing derogs, keeping current and maintaining 100% payment history, establishing 3-5 revolving accounts and 1 installment account, and keeping UTI below 10% on one account only - do these things and the scores WILL come over time.

In fact, during rebuild, don't even bother to monitor your scores. Just get your accounts established, work the derogs off, let your accounts age, manage balances wisely and check your scores every 3- 6 months. Rebuilding is a long process, often taking two years or more to get re-established.

[DoroLucky]

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@Anonymous wrote:

Balance change may have triggered the alert with myfico, but that doesn't mean the balance change is what caused the one point drop. There are lots of things that affect your score that don't even trigger alerts.

During the rebuild process, your scores are going to move through various scoring buckets as things in your files change. Going from one bucket to another often causes unexpected and seemingly illogical changes.

Bottom line is - don't sweat the minor fluctuations, concentrate on the CONTENT of your credit files. Removing derogs, keeping current and maintaining 100% payment history, establishing 3-5 revolving accounts and 1 installment account, and keeping UTI below 10% on one account only - do these things and the scores WILL come over time.

In fact, during rebuild, don't even bother to monitor your scores. Just get your accounts established, work the derogs off, let your accounts age, manage balances wisely and check your scores every 3- 6 months. Rebuilding is a long process, often taking two years or more to get re-established.

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Thanks so mcuh, I will def follow this advice. 

For my open accts I have 3 CC's ( with a 4450 total limit), 1 auto loan, 1 student loan (deffered)...should I try to add anything else to the mix?

[Anonymous]

You could add a couple more revolving accounts, but I would not say that you *need* to do so. The recommended number is usually 3-5 accounts. Since you are getting up into the mid 600's you should review your current revolving accounts and if they are 'builder' or 'starter' type of accounts (secured or annual fee accounts) then it may be time to start replacing them with better accounts.