Loans and Credit Cards Paid Off Yet Credit Scores Still Dropping

[nycplayboy78]

Good Afternoon Everyone....

I am confused right now I have paid off 2 loans this month (February 2016) to zero and I have my credit cards have a zero balance but yet I got an alert today stating that my scores across the board by 40 points from from 740 to 700 across the board...WHAT IN ALL THE HELL IS GOING ON HERE? My resolution is to be debt free this year and now I am sufferning for it. When will my scores increase again what is this tactic? Why does this happen? When I use my credit card I PAY THEM OFF every month if I use it that month before the payment date is due. I am just confused right now...Something just doesn't feel right...SIGH....

[DoroLucky]

Not sure why but sometimes paying everything to a ZERO balance can and will decrease your score which is what happened here. Maybe other long time members can explain. I never understood that either. Next time, try to leave a small balance.

[Anonymous]

Paying the cards to right at 2 to 5% utilization is good but paying off loans takes away from one of the Fico account mix breakdowns. It looks for active installment loans with balances lower than the original loan amount, and then at cards both retail and bank cards and it also looks for active real estate accounts

http://www.myfico.com/CreditEducation/Types-of-Credit.aspx

[nycplayboy78]

Thank you for your response but this is all so confusing. I am old school I guess to matter of when you pay something off to zero that is a GOOD THING. It seems like nowadays paying credit cards off to zero everything and paying off loans early seems to be of a detriment to the lender. It makes no sense at all...

[Mattopotamus]

As the above user said, installement payments are good for diversity in your profile.  Are you sure those payments have already posted to your credit profile? You said you just paid them off this month.  Maybe something else caused the dip in your scores?

[Anonymous]

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@nycplayboy78 wrote:

Thank you for your response but this is all so confusing. I am old school I guess to matter of when you pay something off to zero that is a GOOD THING. It seems like nowadays paying credit cards off to zero everything and paying off loans early seems to be of a detriment to the lender. It makes no sense at all...

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Trust me I know the feeling but it is a good sign you paid it off. It shows other creditors you know how to play ball. Your scores will bounce back as your accounts keep aging. Try to let a card report a balance each month and see if that does anything.

[Loquat]

For some reason paying all of your balances to zero can be a bad thing for your score.  I've done it on a couple of occasions where I would pay all balances to zero and my score would drop 15-30 points.  The moment I let a small balance report my score regains.  

[SouthJamaica]

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@nycplayboy78 wrote:

Good Afternoon Everyone....

I am confused right now I have paid off 2 loans this month (February 2016) to zero and I have my credit cards have a zero balance but yet I got an alert today stating that my scores across the board by 40 points from from 740 to 700 across the board...WHAT IN ALL THE HELL IS GOING ON HERE? My resolution is to be debt free this year and now I am sufferning for it. When will my scores increase again what is this tactic? Why does this happen? When I use my credit card I PAY THEM OFF every month if I use it that month before the payment date is due. I am just confused right now...Something just doesn't feel right...SIGH....

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1. You're not suffering, you're in good shape; you're debt free. You've beaten the banks at their own game.

2. FICO works for the banks, not you, which is why it doesn't reward you for being debt free. Banks don't make their money from the debt free.

3. Getting down to specifics as to the bizarre algorithms employed by FICO:

(a) you would have a higher score if one of your loans were kept open with a tiny balance; and

(b) you would have a higher score if one of your credit cards were reporting a tiny balance.

[nycplayboy78]

This dropped by score by 16 points:

 
Company THD/CBNA

    Balance
    $0

    Past due
    Not Reported

    Status
    Pays account as agreed

    Last activity
    08/01/2015

    High credit
     $700

Company ACS/BANK OF AMERICA

    Balance
    $0

    Past due
    Not Reported

    Status
    Pays account as agreed

    Last activity
    05/01/2014

I don't get my that student loan I paid off 2 years ago is coming back to haunt me and that dropped my score by 16 points. I paid off a LendingClub lo which I took out for 36 months and I paid it off in 8 months...Don't judge me..LOL...And I paid off another high interest rate loan from Wells Fargo in 6 months...DON'T EVER YOU WELLS FARGO THEY ARE BLOOD SUCKERS LEECHES VAMPIRES AND OTHER THINGS THAT SUCK!!!!! Mistake I won't make again...EVER.....

[ScoreOrBeScored]

If you have a discover, go out $59 charge on it then after it lost ask them for a off cycle update.

yiu should get points back in 3 days