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Pay Off Credit Cards, But Not All of It?

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CreditPhoenix
Established Member

Pay Off Credit Cards, But Not All of It?

Credit scoring is nothing short of stupid.  I've paid every bill I've ever had in my life on time.  For whatever reason, I was sitting at a 772 credit score.  I have a mortgage and a credit card.  That's it.  The bureaus pretend I have "revolving credit" because there's a balance when my credit card statement gets printed.  Upwards of $800-$1,000 per month.  Nevermind the fact that it's paid in full each month.  

 

MyFico says my score will jump to 817 if I pay down this "revolving" (but not really) credit.  So the next month, I get the balance down to $163 at statement time.  It ups my score to 782.  Good, but not good enough, apparently.  So the next month, I decide to make sure it's paid in full and untouched at statement printing time.  $0 balance.  What's the result?  My score drops back to 772.  **bleep**!?!  How stupid is this?

 

What is it...  I need some debt, but hardly any?  Am I more credit worthy with a $1 balance than a $0 balance?  How on earth does this work and who's making the rules?

Message 1 of 3
2 REPLIES 2
Anonymous
Not applicable

Re: Pay Off Credit Cards, But Not All of It?

What is it...  I need some debt, but hardly any?

 

Yes.

Message 2 of 3
NRB525
Super Contributor

Re: Pay Off Credit Cards, But Not All of It?

Congratulations on the fantastic score. Seriously.

 

With only a mortgage and one credit card you are doing quite well.

When was the credit card opened? (this will relate to Average Age of Accounts)

Which credit card is it? Bank and brand name.

What is the credit line? (this will relate to your utilization percentage)

How much of your mortgage balance is still open, relative to the original loan amount? (another utilization factor, not that you would do anything to change it short term)

 

With the low revolving debt amount you are showing, it is likely that the major factor that will allow your score to rise is simply the passage of time.

 

Other factors could be if the $1k regular spend balance is a relatively significant part of your credit card credit limit.

 

Regardless of your responses to the above, there are some simple and fun steps to take to try to improve your score long term:

Research and apply for 1 or 2 more credit cards.

Consider opening a small share secured CD loan at a credit union to give yourself an installment trade line. $500 goes into a CD for security, you get a loan back of $500, and then you pay it at a low interest rate at about $10 per month over 5 years. Pay down the $500 by $50 to give it a little acceleration of the utilization reduction, then it quietly works as a different type of trade line to help your score, like an automobile loan would without the hassle of oil changes.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
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