topic Re: Score dropped 17 points after paying off a credit card balance to 0. in Understanding FICO® Scoring

Score dropped 17 points after paying off a credit card balance to 0.

Anonymous — Mon, 17 Aug 2020 19:51:59 GMT

My Citi card had a $10 balance, and I paid it off to 0. Today I get a notification of an update to my credit, and when I check, my Experian Fico 8 score dropped 17 points! That is the only change reported.

What is going on? I'm trying to get the best rate on a mortgage soon, and this is not cool.

Re: Score dropped 17 points after paying off a credit card balance to 0.

jasonbourne84 — Mon, 17 Aug 2020 19:56:19 GMT

Is that your only bank-issued (non retail) credit card? If so, that's the problem. You get a penalty if you aren't using ANY of your credit. Ideally, you'd carry a very small balance (less than 9% of your total available credit) on ONE card each month. But, (and again, ideally) you'd have a few more cards carrying a zero balance each month

Re: Score dropped 17 points after paying off a credit card balance to 0.

blindambition — Mon, 17 Aug 2020 20:10:21 GMT

You typically want 3 revolving cards and 1 installment for best credit mix. Practicing AZEO, or all credit cards accounts at zero except one.

If you only have 1 card. You just experienced all accounts reporting zero penalty. Since shopping for mortgage, don't open cards now. Your LO might tell you to open a couple though, before approval!

Re: Score dropped 17 points after paying off a credit card balance to 0.

Anonymous — Mon, 17 Aug 2020 20:18:27 GMT

I have a bunch of cards,. 2 Citi, 2 Chase, 1 Captial One, 1 American Express, 1 BOA, and I think 2 Synchrony cards. I also have a PayPal Credit account, and an Amazon Store Card. My Amazon Chase card (not the store card) almost always has a balance. Right now that is $115. Everything else is 0.

Re: Score dropped 17 points after paying off a credit card balance to 0.

Anonymous — Mon, 17 Aug 2020 20:21:39 GMT

You might want to take a deeper look at your CR then, paying off a CC while still having balances on others should not cause a 17 point score drop. At least not in my experience.

Re: Score dropped 17 points after paying off a credit card balance to 0.

Anonymous — Mon, 17 Aug 2020 20:23:22 GMT

I have a good amount of cards and a mix of credit too. I just checked and it looks like my Chase card last reported a 0 balance, so I guess all my credit cards are reported as 0. When the current balance of $115 shows up, will that boost me back up?

Re: Score dropped 17 points after paying off a credit card balance to 0.

Girlzilla88 — Mon, 17 Aug 2020 20:27:24 GMT

You should see an increase once things go back just make sure it's a Bank card reporting

Re: Score dropped 17 points after paying off a credit card balance to 0.

blindambition — Mon, 17 Aug 2020 20:41:12 GMT

There's also a caveat with Chase. Don't use a Chase card as the one that reports. Once paid to 0, Chase automatically reports. Even mid cycle. Which means you'd experience All Zero penalty again.

Re: Score dropped 17 points after paying off a credit card balance to 0.

Anonymous — Mon, 17 Aug 2020 20:43:16 GMT

Maybe I'll pay it to $1

Re: Score dropped 17 points after paying off a credit card balance to 0.

blindambition — Mon, 17 Aug 2020 20:51:42 GMT

@Anonymous wrote:
Maybe I'll pay it to $1

Some cards will still show 0% on less than like $5. Haven't tested on my Chase cards.

Re: Score dropped 17 points after paying off a credit card balance to 0.

Girlzilla88 — Mon, 17 Aug 2020 21:15:01 GMT

You definitely don't want it to be so small of an amount it rounds down to 0% honestly anything 8.9% and below is good for the one reporting just NO 0 lol

Re: Score dropped 17 points after paying off a credit card balance to 0.

Anonymous — Mon, 17 Aug 2020 21:20:57 GMT

I might just leave it at $20. I definitely want this bump. Does anyone know when Chase (Amazon) reports?

Re: Score dropped 17 points after paying off a credit card balance to 0.

blindambition — Mon, 17 Aug 2020 23:30:31 GMT

Chase will report on statement date. For example, mine closes today. It will report tonight.

Re: Score dropped 17 points after paying off a credit card balance to 0.

SouthJamaica — Tue, 18 Aug 2020 02:03:17 GMT

@Anonymous wrote:
I have a bunch of cards,. 2 Citi, 2 Chase, 1 Captial One, 1 American Express, 1 BOA, and I think 2 Synchrony cards. I also have a PayPal Credit account, and an Amazon Store Card. My Amazon Chase card (not the store card) almost always has a balance. Right now that is $115. Everything else is 0.

Then the zero balance did not cause the score decrease. Something else did.

Re: Score dropped 17 points after paying off a credit card balance to 0.

SouthJamaica — Tue, 18 Aug 2020 02:04:35 GMT

@Anonymous wrote:
I have a good amount of cards and a mix of credit too. I just checked and it looks like my Chase card last reported a 0 balance, so I guess all my credit cards are reported as 0. When the current balance of $115 shows up, will that boost me back up?

Yes. Since you had no cards reporting a balance you received the "all zero" penalty. It will come back to you when any card reports a balance.

Re: Score dropped 17 points after paying off a credit card balance to 0.

SouthJamaica — Tue, 18 Aug 2020 02:06:02 GMT

@Anonymous wrote:
Maybe I'll pay it to $1

No that's too low; it might show as zero.

If you want to use a Chase card as your card reporting a balance you can't ever pay it too close to zero, need to leave at level that it will always report at least $10 or $20.

Re: Score dropped 17 points after paying off a credit card balance to 0.

SouthJamaica — Tue, 18 Aug 2020 02:07:28 GMT

@Anonymous wrote:
I might just leave it at $20. I definitely want this bump. Does anyone know when Chase (Amazon) reports?

It doesn't have to be the Chase card. Can be any card that will report soon.

Other than the zero balance days, the Chase card reports a couple of days after the statement date.

Re: Score dropped 17 points after paying off a credit card balance to 0.

sarge12 — Tue, 18 Aug 2020 02:33:54 GMT

@Anonymous wrote:
I have a good amount of cards and a mix of credit too. I just checked and it looks like my Chase card last reported a 0 balance, so I guess all my credit cards are reported as 0. When the current balance of $115 shows up, will that boost me back up?

It will if that was for sure the cause of the change, and it likely was in this case. Be careful with alertable events creating new pulls though. The alert will say what alertable event happened, and what your credit score is. It is not saying the alertable event resulted in the points change. The alert and score are 2 seperate, and possibly unrelated data points. That causes more confusion than anything I know of in Myfico, because they put those 2 things right there together. Someone sees a 20 point drop with an alert of a paid tradeline and thinks paying the card off cost them 20 points. What really happened is something else caused the drop that does not generate an alert. Paying off a card will only lower your score if no other card is reporting. Anything, including crossing some threshold for account aging can change a score. Some actions can raise and lower scores often enough for users here to reasonably predict the results, such as an inquiry. If you ever see a drop in score after you pay off a cards balance, and you still have at least 1 card reporting a balance...look elsewhere for the cause of the drop. Look closely to be sure the card is not being balance chased by the issuer. It seems at times some issuers like to wait until someone starts paying down debt to balance chase, but I don't know why they do that if not coincidental.

Re: Score dropped 17 points after paying off a credit card balance to 0.

Face_Value — Wed, 19 Aug 2020 02:17:55 GMT

what is "balance chasing" and what causes that?

why would they mess with you when they see you trying to pay your bills?

Re: Score dropped 17 points after paying off a credit card balance to 0.

SouthJamaica — Wed, 19 Aug 2020 03:12:20 GMT

@Face_Value wrote:
what is "balance chasing" and what causes that?

why would they mess with you when they see you trying to pay your bills?

It's a form of adverse action. They lower your credit limit to a little bit above your current balance. Then when you make a payment and lower the balance, they lower your limit again.

As to why they do it.... well take your pick...

Banks are

(a) stupid

(b) heartless

(d) sociopathic

(e) all of the above

(f) other