Accounts paid off score goes down 42 points

[Abby4]

One month ago all three scores around 805, I have a credit card with $5000 balance, I paid it off with a $4 balance, scores went down 21 points!, I had a car loan since 2017, never missed a payment, paid off balance of $12000, balance zero...score goes down another 21 points, so I am now down 42 points. So best I can tell the credit reporting agencies require you to be in debt to get a great score.??

[Anonymous]

Google search told me

Experian on why your score dropped for the loan:

https://www.experian.com/blogs/ask-experian/why-did-my-credit-score-drop-when-I-paid-off-a-loan/ 

Experian on why your score dropped for the card: https://www.experian.com/blogs/ask-experian/why-did-my-score-go-down-when-i-stopped-using-my-credit-... 

[blindambition]

We're those actual FICO scores? Does your card show 0% on report? I've found that under like $10 will not show a %.

The sweet spot on loan is under 8.9%. You will see a drop after payoff. Was that your only installment?

[Abby4]

Yes, those are the actual FICO scores before I paid them off, My CC with the $5000 limit had a balance of around $250 , I paid that off, but I was $4 short, so I paid the $4.00 and when I did that balance $0, score down 21 points!...my car loan I had been paying every month $366, since 2017, I decided with all this mess going on in the country now, I would lower my debt, so I paid off the car loan $12000 balance, paid off to $0,scores go down another 21 points, so now I have 3 credit cards with no balance, no loans, and I do not have a mortgage because my house I bought with cash. So I have no reportable debt, $7000 in credit card limits, and a $25,000 home equity line of credit, with a zero balance.

[blindambition]

When you paid off the card, that was the all accounts reporting zero penalty.
For best scoring on cards, have one Report a small balance. AZEO, all zero except one.

For best credit mix. 3 cards and 1 installment. Your score will gain points with AZEO, but will continue a small penalty without installment.

[Abby4]

I have no late payments on any credit cards or car loan, all accounts say pays as required, or no late payments, balance $0

[Slabenstein]

FICO8 has penalties both for having no cards report a balance and having no active installment loans.  Whether or not it's fair to the consumer, the historical data FICO used to create the score algorithms apparently indicates that someone who is not actively managing any credit cards is slightly more risky than someone who isn't, and likewise for installments.  To reverse the all-zero revolvers penalty, all you need to do is let one of your national bank cards report a small balance.  To reverse the penalty for no insallment loans, you can look into the SSL technique and see whether it's something you feel like messing with.

[Abby4]

what is the SSL technique? I will charge some amount? on one of my cards, what would be the most % of debt would I need to be not penalized.

[blindambition]

Let one card report $10. That's all you need.

The SSL process can be found here 

[Slabenstein]

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@Abby4 wrote:

what is the SSL technique? I will charge some amount? on one of my cards, what would be the most % of debt would I need to be not penalized.

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For the revolving amount you can charge w/o util penalty, it would be 9% of your agg limit & 29% of that individual card's limit.  For the lower limit, I would make sure at least $5-$10 reports.