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@Anonymous wrote:
I decided to pay my car loan and all cc accounts in full thinking I was doing the responsible thing. I just checked my FICO score and all three have dropped 50+ points!! What can I do to turn this around?? I worked so hard going from average 540 up to 657 and now back in the high 500's and so disappointed. Any help is appreciated! Thank you
With all revolving CCs at 0 it scores as 30% util, let 1 of your cards report a $2-$10 balance this will score as1% utilization. If you have no instalment loans open now you most likely lost up to 10 points for that but dont go get another instalment just to satisfy Fico you will regain those points as your accounts age. A 50 point loss seems a little high though did a derog show up somewhere?
Dont worry , you will gain all these point and more in a couple months . You lost a lot of points from your loan closing . Reporting zero balance on all cards is not a good thing , you want to at least leave a few dollars on one card .
Ha, yea. The exact SAME thing happened to me. My score dropped almost 40 points when I paid off all my credit cards at once. (how that makes sense? I have no idea).
I'm sure the car loan ending was a big drop as well. When I paid mine off, my score dropped 30 points. Came back within 3 months...but still a shock. Lenders don't like to see you paying stuff off I guess *shrug*
For cards, I've tried a million and one different combinations, and like the above poster said: having 0 balances on all cards except one is the best route. And try to keep that balance as low as possible. People say to keep it below 10%, but your score will raise even more if you keep it as low as humanly possible (even $1). I've tried it, and my score does in fact, increase when I go from 9% ultil to .05% util. Not as much as going from 30% to 9%, but it's an increase nonetheless. Just make sure all your other cards are $0 balance (if at all possible), or you will not have the maximum score.
I am not a professional, just speaking from my personal testing and experience. ymmv
"Lenders don't like to see you paying stuff off I guess *shrug*"
Not sure why this would be a surprise to anyone. Lenders don't make money from a paid off loan...they make money from you paying ON the loan. The longer you pay on it the more they make. Thats why they love to push those 72 month car loans and 30 year mortgages, when 36 month car loans and 15 year mortgages make more financial sense from the consumer standpoint.