Pay off CC debt (FICO algorithm)?

[Anonymous]

All,

Is it best to pay off a card prior to statement cut? My score dropped 12 points after reflecting a zero balance. I do use all my cards actively and typically keep a 20$ balance At statement ending. This time, autopay paid it off for me -_-. With that, my score dropped.

Is it because the algorithm is not used to seeing my balance at ‘0’? For years, I’ve never had a zero balance but have been somewhat close. Does the algorithm think my card is closed? And will it go up next month if I pay it off again at statement close? Not sure of the scoring patterns..

Or should I disable autopay and go back to a 20$ balance each month?

I know best practice is to have a 0 balance but continue to actively use the card. To me, I’d rather have my score higher with a 20$ balance (and pay that interest) than have a lower score at 0 balance.

Thoughts?

[Anonymous]

When all cards are reporting $0, you get a 15 point penalty (roughly).  The penalty vanishes when one card reports a positive balance.  The balance can be quite small.

[Anonymous]

Thank you. I guess I’ll go back to my old method.

[Anonymous]

Set your autopay to pay the full statement balance, not the full current balance.

[Anonymous]

You know I just realized. My other cards are not zeroed out. I have 45$ on one and 65$ on another card. This was intentional to leave a balance. Strange that my third which reflected zero balance card caused my score to drop.

Also, no other credit reporting changes and I’m floating at 3% util @ 22k CL if matters

[Anonymous]

I

[DollyLama]

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@Anonymous wrote:
You know I just realized. My other cards are not zeroed out. I have 45$ on one and 65$ on another card. This was intentional to leave a balance. Strange that my third which reflected zero balance card caused my score to drop.

Also, no other credit reporting changes.

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The two balances, have they reported to the bureaus yet? Or just will be soon? 

Paying one off and not closing would not result in a score decrease. Other factors would be a cause, we would have to know more about your file and did it affect all 3 bureaus or just one? And which credit monitoring service you are using?

[Anonymous]

Experian app and MyFico.

Yes others reported the balance (~120$ combined).

Very strange. I don’t know if it because I never zero out my balances and this month I did on one acct

Yes nothing has changed on my file. I’ve been actively monitoring it for the past 2 years..

[SouthJamaica]

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@Anonymous wrote:
You know I just realized. My other cards are not zeroed out. I have 45$ on one and 65$ on another card. This was intentional to leave a balance. Strange that my third which reflected zero balance card caused my score to drop.

@Also, no other credit reporting changes and I’m floating at 3% util @ 22k CL if matters

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The score drop was unrelated to the card reporting a zero balance.

[Anonymous]

Nothing else was added to my report. My installment loans, I still have been paying that down. Nothing different there other than the minimum payments and I still have a way to go.

No new accounts. Only changes are the balances. And as mentioned, in this case one was zeroed out. The other two +/- 10$ balances from the previous month.

That’s why I was questioning the criteria of score changes in relation to consumers paying habits.