Paid off a credit card to zero balance and score dropped

[Pigeyex]

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@RobertEG wrote:

When a closed account is paid, then it is no longer scored under your % util.  No CL or balance.

If the card had a relatively high credit limit, loss of that CL in the denominator of your % util calculation can cause an increase in overall % util.

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Does a CL that shows on the TL, but has since been revoked, count?  I have an old CC from my credit union that was "revoked" -- my ability to use the charge card anymore was taken away from me, although I've continued to make on-time monthly payments -- over 7 years ago.  Experian doesn't show the TL, but TU and Equifax do, but since Experian is the only one that tracks my credit utilization (because I subscribe, so they show on my monthly report summary) I have no idea how this account is being treated.

I"m also now wondering if I actually HURT myself by making these payments every month, as that's somehow kept the account "open" in such a way that it didn't fall off my credit reports after 7 years.  My FICO Equifax report shows it as "Closed 7/2007" (that's when they revoked my card), but I'm still making on-time payments on it every month for over 4 years now.

I know the OP's question -- and mine -- go to the whole "well, it may not help your SCORE, but an underwriter is going to look at your file and whether or not you've paid off your debts" thing, but it sure seems like you get screwed in your SCORES in these situations.

Pigeye

[korunner]

well i am here to tell you if you have a card the company closed for use but did not officially close and you pay it off it KILLS your credit score. i think this is because it is no longer part of your CL once it's paid in full. each day i get an email with a "new alert" that my score changed. i get excited since i know i have paid things off and am waiting for them to post. then it see it. scroe is droping every time another account is paid in full. this is painful to watch. not what i had hoped for. maybe once my pay-for-deletes post i will be in a better position. how much does having collections removed from yout account help your score?????

[korunner]

Update: I just saw a HUGE jump in my experian score (other two have not reported yet). My utilization went from 92% to 45% on a card with a 15k limit and my score went from 577 to 603!!!!!!!!!!!!!

[korunner]

woo hoo another jump this morning. i  got another 15 points on my equifax 577 to 591. now TU needs to update. still waiting on my PFD to post. that sould be first week of december. i am hoping to see a big jump with those since they were relatively recent. 

[Anonymous]

I have no baddies, no colections, no late payments nothing and I have always kept relatively low balances on my credit cards.  Last month I paid everything down to a zero balance and both TransUnion and Equifax dropped my scores by a good 15 - 20 points despite a perfect history of using and paying the cards  Aside from being a little miffed I had to laugh.  I guess I will leave a balace on one or two of the cards and see what happens.  I'm looking for the best practice as I'm getting ready to refi my home.  I'm guessing paying off all my credit cards was not the thing to do.

[gdale6]

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@Anonymous wrote:

I have no baddies, no colections, no late payments nothing and I have always kept relatively low balances on my credit cards.  Last month I paid everything down to a zero balance and both TransUnion and Equifax dropped my scores by a good 15 - 20 points despite a perfect history of using and paying the cards  Aside from being a little miffed I had to laugh.  I guess I will leave a balace on one or two of the cards and see what happens.  I'm looking for the best practice as I'm getting ready to refi my home.  I'm guessing paying off all my credit cards was not the thing to do.

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let a small balance report on 1 card (less than 9% of its CL) and you should get those points right back. All revolvers at 0 is always a drop in Fico score for not using any of them.

[Anonymous]

Thank you very much! I can definitely do that