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Posts: 2,633
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.

 

http://ficoforums.myfico.com/t5/Credit-Cards/CAP-ONE-EXEC-OFFICE/m-p/1816493/highlight/true#M506408

 

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.

  8-12-14: FICO EXP: 797 - EQU: 734 - TRAN: 739 - AVG: 757 - +207 points from JUN 2008 - MY CREDIT JOURNAL