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Paying off credit card lowers score?

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New Visitor

Paying off credit card lowers score?

I have a credit card from a credit union, that I make occasional purchases on and either pay off in the same month or within a couple of months.  Whenever I make a purchase on the card, my credit score goes up.  When I make a payment or payoff the balance my credit score goes down.  This seems like it is operating opposite to what I'd expect.  Why is this happening?

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Valued Contributor

Re: Paying off credit card lowers score?

Hi  jfullert, Welcome to the forums! 

 

Is this your only revolving credit account?  If so, allowing it to report a $0 balance will cause your FICO scores to drop as you are penalized for having 'no revolving credit usage'.   At least one of your cards must report a balance -- but not too high of a balance -- to prevent this penalty.  Once your card reports a balance again, you'll regain your lost points. 

Personal Aphorism:
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2020 Goal Score | 800s


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Valued Contributor

Re: Paying off credit card lowers score?

Yes reporting a zero balance will lower score if it's your only card. I get my balance down to less than 8% on one card then PIF when statement cuts. My other two report zero. It seems to satisfy fico
July 2020
Experian Fico 8. 707
Transunion Fico 8. 705
Equifax Fico 8. 724

Capital one QS. $700
.
Capital one QS1. $2450
Discover IT Cashback. $12,000
PNC cash rewards signature Visa. $17,500
Chase SW rapid rewards signature visa $6900
Amex Green Card NPSL POT $11,000

All cards opened between Oct 2018. - March 2020

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