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PAYING OFF BALANCES

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PAYING OFF BALANCES

JUST SAW THAT MY FICO SCORE WENT DOWN 12PTS AFTER ONE OF THE BALANCES DECREASED BY $200.  SHOULDN'T PAYING OFF MY DEBTS INCREASE MY SCORE?

Message 1 of 12
11 REPLIES
Community Leader
Super Contributor

Re: PAYING OFF BALANCES

Hello NNK.  Welcome and glad you are with us.

 

How many cards do you have?  Your subject line describes this as a "payoff."  Did that mean that the credit report showed all cards at $0?  If so, there is typically a 10-20 point penalty for doing that.

 

PS.  Your initial post uses capital letters for all the words.  Using "all caps" is considered "shouting" and is discouraged here.

Message 2 of 12
Community Leader
Valued Contributor

Re: PAYING OFF BALANCES

Yeah, if every card reports a balance of zero, a 15-point or so ding is pretty typical. For optimal scoring, FICO likes a small balance on one card with the rest reporting zero. You don't have to pay interest to pull this off. That balance can come from charges made during the current month.

 

There's no need for frustration, though. The ding is temporary until the next time a card reports a small balance. When one understands the reasons behind score fluctuations, it becomes easy to take them in stride.

Message 3 of 12
Established Contributor

Re: PAYING OFF BALANCES

Should have at least one balance reporting each month.  

 

You can pay the others off pre-statement.

 

Alternate cards, rinse, repeat.

credit rebuild started 01/01/14
$100k credit card goal achieved 10/01/17
now in the garden with $140k in credit cards
--------------------------------------------------------------------------------------------------
  $ 30,000          $ 25,500          $ 23,750             $ 13,500             $ 7,000            $ 1,800     


  $ 17,000          $ 10,000              $ 6,000            $ 4,000     
Message 4 of 12
Super Contributor

Re: PAYING OFF BALANCES

OP what are your FICO scores?

Do you have any late payments in your file?

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

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not.
Message 5 of 12
Super Contributor

Re: PAYING OFF BALANCES

Maybe I'm reading too much into this, but the OP said that he paid down "one" of his balances and saw a score drop.  To me, this implies that he still has other balances present.  That being said, it would be next to impossible for a $200 paydown to result in a 12 point score drop. 

 

Hopefully the OP will pop back into this thread and offer up a bit more information here.

Message 6 of 12
Valued Member

Re: PAYING OFF BALANCES

I have a bit of a different situation.  Have a Capital One Quicksilver 1 card. It was inactive for months.  I used it and charged $473, paid it off in full.  The next month, my score increased (Equifax) because “an inactive card has become active”.  The following month,  I charged another $475 and paid it off.  My score dropped 6 points. I have another card with an $1,800 balance paid down from $6,000, and several other cards with no balance.  Scores are EQ: 738 (down from 744), TransUnion 803, Experian 769).  Any idea why?

 

Jeff

Message 7 of 12
Super Contributor

Re: PAYING OFF BALANCES


@JeffhackerThe next month, my score increased (Equifax) because “an inactive card has become active”. 

Your score didn't necessarily increase for that reason.  Any time you receive an alert, you receive a new score based on your credit profile at that time.  Any number of changes may have happened between your last score and your new one aside from just the alert reason.

Message 8 of 12
Valued Contributor

Re: PAYING OFF BALANCES

Hard to attribute score changes to anything unless you have real time daily update of score and report, the only place to get this (without breaking your bank) and the only credit service I pay for is Experian.
Message 9 of 12
Super Contributor

Re: PAYING OFF BALANCES


@Jeffhacker wrote:

I have a bit of a different situation.  Have a Capital One Quicksilver 1 card. It was inactive for months.  I used it and charged $473, paid it off in full.  The next month, my score increased (Equifax) because “an inactive card has become active”.  The following month,  I charged another $475 and paid it off.  My score dropped 6 points. I have another card with an $1,800 balance paid down from $6,000, and several other cards with no balance.  Scores are EQ: 738 (down from 744), TransUnion 803, Experian 769).  Any idea why?

 

Jeff


Has EQ been consistently lower? Does EQ have more, or more recent, INQ?

What was the timing of the pay down from $6k to $1,800, relative to these score changes? What is the credit limit on that specific card?

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

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not.
Message 10 of 12