Score drops with early payments

[Anonymous]

I'm applying for a mortgage and have been limiting my credit usage to only 10-20% of available credit and paying off card balances early. It seems that paying cards before the due date is harmful though, because my score dropped ten points. We also paid off a 36-month car loan 6 months early, and that seems to have affected the score negatively too. I want to show the mortgage company I am responsible but seem to be penalized for trying to be proactive in payments. Is there anything I can do to raise the score soon or show the bank I have paid off all loans and cards early and am a responsible borrower? Thanks.

[Anonymous]

While your actions are commendable, the results can be counter-intuitive, as you've noticed. Think of a credit score being more akin to a debt score, then it makes more sense. Lenders like to see steady payments, low utilization, etc, but also want to see a decent number (many here recommend 3 revolvers and, if it makes sense to do so, one installment loan) of active credit lines being regularly used. Paying off installment loans, such as for a car, entirely can hurt. I've read posts from some on here regarding taking out / continuing installment loans / home equity lines for scoring purposes.

As for losing 10 points, that may not matter if your current scores are already relatively high. Beyond a certain threshold, additional points above that make little to no difference. Probably the biggest difference in the interest rate you get will be who you finance through and the type / length of the mortgage. Shop and ask around.

[gdale6]

You want to have at least 1 card reporting a small balance 20 bucks is good enough and it should not be more than 9% of its CL, all revolvers at 0 is a Fico score drop.