I paid off a $3500 credit card last month. Couldn't wait to see if my score went up. It went from 625 to 603!!! I can't believe it! I feel so discouraged! I want to raise my score to buy a house in the future.I thought if I paid off one card at a time it would help...not hurt. I have a couple of cards with 300-500 limit. Should I close them as I pay them off? I've only had them for 6 months or so. Thanks for any info,
Don't be discouraged, paying off revolving debt will help you tremendously in the long run.
DO NOT CLOSE YOUR ACCOUNTS! Having them on your report will give you a longer average age. Closing them will hurt your score in the long run. I would ask for credit line increases on your cards and use them occasionally, but responsibly. By responsibly I mean always make your payments on time, and try not to use more than 30% of your overall credit available...never use more than 50%, unless you have to.
What probably happened is that you were in the "bucket" of people who have say $5,000 of debt. You were rated at the top of those people because you were paying down the debt, paying on time, etc. You paid off the card and you "graduated" to the next bucket. Now you start at the bottom of those people because some of them have longer credit histories. Hang in there, it will get better! And I agree, do not close any accounts.
----------------- Bartender, bring another round of FICOtinis please!
I wouldn't close the accounts. Yes, they're probably giving you a short-term hit because they are new, which dragged down your average age of credit lines. But in the long run, the accounts will help. And usually going from one "bucket" to another, as someone else pointed out, gives you a greater long-term potential to raise your scores.
You did the right thing, and you will be rewarded in the long run, even if you skinned your knee in the short run.
- - - - in a credit-scoring postnuclear Stone Age...