Paid off balance and score dropped

CreditSage · ‎08-22-2019

I paid the balance (which was roughly 98% UTL) on my CLOSED Capital One card and my score dropped 5 points - that's weird. Nothing else changed and the account being closed had previously been repoterd to the credit bureaus. Any thoughts?

Current Open: NFCU AMEX $6,800 CL | Chase Freedom $3,800 CL | QS1 $1,300 CL | BankAmericard $24,000 CL (AU) | NFCU SSL $3,000 |
FICO 8 EXP, EQ, TU: 675-715 (depending on Utl.) | AAoA 3 Years 3 Months | AoYA 0 Months

Closed: American Honda Finance Installment $16,000 paid satisfactorily | Capital One Secured $700 paid satisfactorily | Wells Fargo credit card $3,000 paid charge off settled less than full amount (badie 2015) | Bank of America credit card $1,000 paid charge off settled less than full amount (badie 2015)

Remedios · ‎08-22-2019

Did that closed account had any negative info on it such as lates? Was it charged off?

CreditSage · ‎08-22-2019

Nope. Closed at customer request. They then reported it closed with a balance... then I paid of the balance and they reported it closed w/out a balance and my score dropped 5 points.

Current Open: NFCU AMEX $6,800 CL | Chase Freedom $3,800 CL | QS1 $1,300 CL | BankAmericard $24,000 CL (AU) | NFCU SSL $3,000 |
FICO 8 EXP, EQ, TU: 675-715 (depending on Utl.) | AAoA 3 Years 3 Months | AoYA 0 Months

Closed: American Honda Finance Installment $16,000 paid satisfactorily | Capital One Secured $700 paid satisfactorily | Wells Fargo credit card $3,000 paid charge off settled less than full amount (badie 2015) | Bank of America credit card $1,000 paid charge off settled less than full amount (badie 2015)

SouthJamaica · ‎08-22-2019

@CreditSage wrote:
Nope. Closed at customer request. They then reported it closed with a balance... then I paid of the balance and they reported it closed w/out a balance and my score dropped 5 points.

Paying off the balance did not cause your score to drop, unless all of your other cards also reported at zero.

Unify FCU Platinum Visa Variable Rate 35k

TD Bank Business Solutions Visa (Bus) 23700

FNBO Evergreen Business Edition Visa (Bus) 20k

Liberty (formerly Evansville Teachers) FCU Platinum Prime Plus MC 15k

US Bank Triple Cash Rewards Visa (Bus) 12k

Geo-fenced credit union Platinum Visa 10500

Members 1st FCU Low Rate Platinum Visa 5k

PLOC: Langley FCU 40k; Penfed CU 15k; NFCU 15k; Teachers FCU 15k; Affinity FCU 10k. BLOC: NFCU 5k

Total revolving limits 568220 (504020 reporting) FICO 8: EQ 689 TU 691 EX 682

CreditSage · ‎08-22-2019

I'll wrack my brain and try to think about what else changed.. pretty sure nothing. I did a CCT pull last week and again today... been paying close attention.

Current Open: NFCU AMEX $6,800 CL | Chase Freedom $3,800 CL | QS1 $1,300 CL | BankAmericard $24,000 CL (AU) | NFCU SSL $3,000 |
FICO 8 EXP, EQ, TU: 675-715 (depending on Utl.) | AAoA 3 Years 3 Months | AoYA 0 Months

Closed: American Honda Finance Installment $16,000 paid satisfactorily | Capital One Secured $700 paid satisfactorily | Wells Fargo credit card $3,000 paid charge off settled less than full amount (badie 2015) | Bank of America credit card $1,000 paid charge off settled less than full amount (badie 2015)

Anonymous · ‎08-23-2019

A closed account with zero balance does not count towards your overall utilization, but a closed account with a balance sometimes does. So maybe your overall utilization increased, causing your Fico score to drop.

Anonymous · ‎08-24-2019

@CreditSage wrote:
I paid the balance (which was roughly 98% UTL) on my CLOSED Capital One card and my score dropped 5 points - that's weird. Nothing else changed and the account being closed had previously been repoterd to the credit bureaus. Any thoughts?

How many ways can FICO punish you for paying off and closing an account? Let me count them:

1: Paying off an account means FICO no longer uses that account in its algorithy because it cannot predict with any certainty whether you will make any future payments on that account.

2: Closing an account reduces your AAoA and your Util at the same time. FICO doesn't like that. After all, closed accounts are no longer open, so they no longer go into the Denominator of the AAoA fraction or the Util fraction.

3: FICO doesn't like paid accounts. I paid off a $56 Amex bill and lost 6 points for my labors. This was on a $13,000 CL, so the balance was 0% Util either way.

I think of the FICO algorithm as a Ouija board - there is no science or logic to it, it just picks a number at random as the spirits move them.