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No Debt but my scores dropped

PhoenixNovak
New Visitor

No Debt but my scores dropped

I paid off the final $1,900 several weeks ago on the only debt (aside from a student loan) that I have and today my Fico scores were updated. One went DOWN 12 points and a second one went DOWN 4 points.  There have been no other changes or even credit being pulled by anyone. I have not sought any credit, so how can my scores drop when I paid off my debt?  Can anything be done about this?

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tufa4311
Established Contributor

Re: No Debt but my scores dropped


@PhoenixNovak wrote:

I paid off the final $1,900 several weeks ago on the only debt (aside from a student loan) that I have and today my Fico scores were updated. One went DOWN 12 points and a second one went DOWN 4 points.  There have been no other changes or even credit being pulled by anyone. I have not sought any credit, so how can my scores drop when I paid off my debt?  Can anything be done about this?


Having an open installment loan is a positive aspect of your credit profile in two ways. One, it shows you can responsibly pay your debts back and on time, and two, it adds to your credit mix. When the debt is fully paid off you loose the installment loan as an open account and with it the aspect of having a good credit mix. This can lead to a drop in scores. The score drop was minimal and not something to be too concerned about. Continue being responsible with your credit and it should bounce back.

796 TU FICO 08 (08/2018)
758 TU FICO 08 (01/12/2016)
753 TU FICO 08 (11/21/2015)
740: EQ Score Power (Beacon 5.0) FICO 04 (01/23/2015)
755 TU FICO 08 (01/21/2015)
652 TU Lender Pull (06/10/2014)
665 TU FICO 08 (05/21/2014)
Goal: 800+
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NRB525
Super Contributor

Re: No Debt but my scores dropped

Welcome to the forums, and this is a frequent first question.

 

The quick answer is, to maintain some score, you should have some reported activity (which does not have to result in interest cost) reporting on some form of credit product. Your student loans probably help (presuming they are actually reporting to your credit report?) but if you paid to zero any other debt items, yes, that can drop your score because FICO loses some items to measure your recent payments on.

 

The best step is to ensure that at least one of yuor credit cards shows a balance on its next monthly statement, and it does not have to be a lot of money. You can pay it off by the payment due date, and not have interest expense, but continue to use the card and at least let a small balance report each month.

 

Personally, I'd let more credit items report, but each person has to choose what they are comfortable with. You do need one CC reporting, that is a given.

 

Good luck!

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
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