Balance decrease causes FICO to drop???

[Anonymous]

I’m so tired of this FICO score. We are closing on a house in 3 months and my score continues to drop because I’m paying my bills! First it dropped because we paid of our house and now it dropped another 18 points because of $58 I paid toward a line of credit for furniture! At this rate I’ll be in the 600s soon because of monthly payments that I pay on time!

[Anonymous]

Your score did not drop because you paid $58 toward a line of credit.  It dropped for a different reason.  I'm assuming you're using MF monitoring that is giving you "alerts" of changes to your credit report and you're assuming that the score provided at the time of the alert has changed (since your last score) because of the alert.  This is not the case.

I started a thread about this misleading issue below months ago in hope that MF would make a change.  Clearly they haven't yet.

https://ficoforums.myfico.com/t5/myFICO-Product-Feedback/Alerts-unrelated-to-provided-score-changes/...

[Berk]

In a nutshell: It's the Installment loan vs the revolving loan. Installment loans close when you pay the total balance due so you lose that account for scoring purposes, average age of accounts, etc. Revolvers stay open so you never lose the account. Granted, it can be more complex than this but paying off installment loans tend to ding your credit short term. 

[Anonymous]

Berk, accounts both open and closed count the same toward age of accounts factors when talking Fico scoring.  The closure of an installment loan can impact the Amounts Owed sector of Fico pie, but not age of accounts.

[Berk]

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@Anonymous wrote:

Berk, accounts both open and closed count the same toward age of accounts factors when talking Fico scoring.  The closure of an installment loan can impact the Amounts Owed sector of Fico pie, but not age of accounts.

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@BrutalBodyShots, thank you for the clarification.

[HeavenOhio]

Are these changes happening on your "mortgage" scores, or are you seeing them on FICO 8?

[Anonymous]

I completely understand your frustrations. I sometimes feel that these credit companies way of determining your score is really off. I paid off a credit card. $45 balance. Utilization for this card 18% to 0% my score dropped 15 freaking points. It literally gives that as a reason for the drop. I have a small balance on 2 other cards. But 15 points for paying off $45 is absolutely ridiculous. This is with Experian. I also filed a dispute with Experian for incorrect information. I got a notification from them saying my account had an update. When I logged onto the Experian website it said my score dropped 5 points. The reason... we received your dispute request. Nothing had changed but they just received the dispute and the score dropped. I am so over all of this. I’m getting a together now to report them. This is crazy.

[Anonymous]

They are telling the truth. If I had a way to upload this screenshot I would. It literally dropped due to paying off a balance. It clearly states that. And if that’s is not the true reason then that seems to be misleading......Telling a consumer that it is for one reason but actually it dropped for a different reason......

[Berk]

This does a half decent job of explaining things...

https://blog.credit.com/2015/06/help-i-paid-off-my-credit-card-my-credit-score-dropped-119515/

Look at #6 on this one...

https://www.doughroller.net/credit/7-things-cause-credit-score-fluctuate-month-month/

[Anonymous]

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@Anonymous wrote:
I paid off a credit card. $45 balance. Utilization for this card 18% to 0% my score dropped 15 freaking points. It literally gives that as a reason for the drop. I have a small balance on 2 other cards.

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Your score did not drop from paying off the $45 balance and you aren't being given a reason for the drop.  You're being provided with an alert for a change to your credit report (balance paid down/off) and at the time of the alert you're being provided with an updated score.  The score change realized does not have to be at all related to the alert reason received.  It's crucial that you understand this.  There are plenty of other things that can go on with a CR that aren't alertable reasons that are causing your score to fluctuate without you knowing it.  If you have a small reported balance on 2 other cards and they aren't store cards or AU cards (they're your own major bank cards) it's literally impossible for your score to have dropped from paying off / reporting a $0 balance on a 3rd card.