Yes, you read that subject correctly. So I recently paid my CapOne card with a small ~$50 balance down to zero and this morning got an alert from myFICO. I fully expected to see a slight bump, maybe 5-10 points for paying the small balance down to zero, as this was the case with another card now showing a zero balance that reported a few days ago.
To my surprise, paying the small balance down to zero saw my Equifax score drop 32 points!
Since I know I'm probably going to get a lot of 'something else must have changed,' I'll preface by saying, I pay for myFICO's monthly monitoring and I'm not new to this. And I think I can confidently say, nothing else changed. So here's the full backstory of a few months....
Stopped using credit cards for a couple of years and no longer had a car loan, so basically used zero credit. Decided I needed to get my scores back up and quickly so a couple of months ago went out and got an NFCU secured and CapOne secured card. Saw my score go up about 80 points from using and paying off the NFCU card. When the CapOne card hit my report my score went down 4 points (ok). At that point, I opened an NFCU Go Rewards card with a 3,500 CL. I've basically been using that card daily since I got it and just putting a charge or two on the others. My score did not change when the Go Rewards account was added to my report (again, ok). When my two secured cards first reported, they both showed very small balances that I paid down to zero. The first to report as zero was the NFCU secured, which saw my score go up 8 points last week (again, makes sense).
So then today I get the alert that my second secured card is reporting as paid with zero balance and I see a 32 point drop? It's the first actual payment to hit my CR, but I still don't understand how paying in full could see my score drop so much. My first payment for the Go Rewards card won't post until last next week, I'm hoping that will see my score go back up again, but for now, I'm extremely perplexed. Any ideas?
@DEcreditguy wrote:Yes, you read that subject correctly. So I recently paid my CapOne card with a small ~$50 balance down to zero and this morning got an alert from myFICO. I fully expected to see a slight bump, maybe 5-10 points for paying the small balance down to zero, as this was the case with another card now showing a zero balance that reported a few days ago.
To my surprise, paying the small balance down to zero saw my Equifax score drop 32 points!
Since I know I'm probably going to get a lot of 'something else must have changed,' I'll preface by saying, I pay for myFICO's monthly monitoring and I'm not new to this. And I think I can confidently say, nothing else changed. So here's the full backstory of a few months....
Stopped using credit cards for a couple of years and no longer had a car loan, so basically used zero credit. Decided I needed to get my scores back up and quickly so a couple of months ago went out and got an NFCU secured and CapOne secured card. Saw my score go up about 80 points from using and paying off the NFCU card. When the CapOne card hit my report my score went down 4 points (ok). At that point, I opened an NFCU Go Rewards card with a 3,500 CL. I've basically been using that card daily since I got it and just putting a charge or two on the others. My score did not change when the Go Rewards account was added to my report (again, ok). When my two secured cards first reported, they both showed very small balances that I paid down to zero. The first to report as zero was the NFCU secured, which saw my score go up 8 points last week (again, makes sense).
So then today I get the alert that my second secured card is reporting as paid with zero balance and I see a 32 point drop? It's the first actual payment to hit my CR, but I still don't understand how paying in full could see my score drop so much. My first payment for the Go Rewards card won't post until last next week, I'm hoping that will see my score go back up again, but for now, I'm extremely perplexed. Any ideas?
If all of your cards report zero balance, scores drop.
It's good for your score to let most of cards report at zero, but you should let one card report a small balance if you want your score to stay up.
The good news is that as soon as one of your cards reports a small balance you'll get the points back.
I know there is always some debate as far as whether or not you should let one card report a balance or not. I had planned on letting my Go Rewards card report a small balance anways, but a 32 point drop for having zero utilization seems like a LOT. I mean, I can understand seeing like a 10, maybe even a 15 point hit, but 32 points?!?! That seems insane. I used to do some underwriting of files back in the day and I can't ever remember seeing someone take a hit that big for paying a balance down to zero. Maybe if said account was closed, but never just for paying it down.
