Valued Contributor
Posts: 2,671
Registered: ‎06-05-2008
Re: FICO dropped after I paid off a debt

JEZeimer wrote:

I use the credit cards each month and pay in full at the end of the month.  So the cards are active but I don't carry a balance.  is it better to carry a balance?

You only pay interest on what you don't pay in full after statement time, but your credit report is not a real-time balance.  It's a snapshot from statement time.  So if you had 2500 on a 5k card at statement time and pay it off right away, your credit report shows 50% usage and your score will tank.  But if you paid 2350 before the statement cut, and then the other 150 after, your credit report would show 3% utilization.   And you would still owe no interest.  


Below is a link to a graph showing how utilization affects a score.


Note that for some profiles, the difference between 0 and 5% utilization is up to 30 points.


Lots of other things affect your score.  It could be that losing an active trade line did drop you the 7 points.  If you compare both reports and the utilization is the same on all CC accounts, maybe it did.  If I were you I'd try posting different balances and see what happens.  Better to know now before you have a Mortgage app.

3-26-15: FICO EXP: 828 - EQU:820 - TRAN: 828 - AVG: 825 +275 points from JUN 2008 - MY CREDIT JOURNAL