Score Drop After Paying Off Credit Card

[sundownskylar]

Im very confused.... I was sitting at a Fico score of 723. Previously my Discover IT card reported a balance of 185... I payed it off and today when it was reported with a balance of 0 my score dropped 11 points... This doesnt make any sense to me. Why would I drop for having 0 being reported.... Please someone advise....

THANKS!

[DaveSignal]

If that is your only credit card, then you need to show a minimal amount of utilization, otherwise it appears that you are not using credit. Less than 10% on one card will generate the best results. Leave a few dollars on it next time.

[sundownskylar]

OK thanks!

My credit cards include:

Amex PRG (NPSL)

Discover It  ($2000)

Chase Freedom ($1000)

Citi Diamond Preferred ($9,000) 

[BigBS]

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@sundownskylar wrote:

OK thanks!

My credit cards include:

Amex PRG (NPSL)

Discover It  ($2000)

Chase Freedom ($1000)

Citi Diamond Preferred ($9,000) 

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Do any of those cards have a carry a balance?  Would not appear so based upon that drop, but would help the discussion.

[sundownskylar]

No i pay them off a couple days before the due date so they report 0.....

[nanrod98]

It's a stupid system ill concived and ill controlled - if I have a balnce on my credit card at the statement date - in my case 24th of the month and the scam credit score algorithym sees a balance it hits your score even though you pay it off in a few days - I just had a 100% balnce reduction from $50 to zero and I bought a car cash - no credit and my score went down Go figure.

[VirtualCuriosity]

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@nanrod98 wrote:

It's a stupid system ill concived and ill controlled - if I have a balnce on my credit card at the statement date - in my case 24th of the month and the scam credit score algorithym sees a balance it hits your score even though you pay it off in a few days - I just had a 100% balnce reduction from $50 to zero and I bought a car cash - no credit and my score went down Go figure.

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It's not really a scam if you know what it is and whether or not you want to play.  Your FICO score is based on debt.  You have to have debt to get a score.  You have to have debt and pay it to get a higher score.  You obtain the ability to go in debt, pay the debt on time, and your score goes up.  You do not play with debt, your score goes down.  IF you woke up tomorrow with 100 million dollars in the bank, or won the 1 Billion dollar bracket challenge, your score would not be affected.  So, FICO is not based on your cash, it's based on your debt and how responsible you handle it.  Some people are obsessed by the game, and some people don't even bother playing it.  It's up to you. 

[Jerzee123]

Im trying to understand this clear also (because im trying to rebuild my credit )(build my scores)..

I thought we want all credt cards to have $0 balance in order to avoid paying the high interest.. but your previous response was to leave a few dollars as a balance to show utilization......

so example : lets say i have

2 credit cards..Cap 1 CL $300 and JCPenny $250CL

I use JCPenny and purchase an amount of $50...i get my statement and it says Minimum Due $25.. Ioff the full bal of $50 was the idea.. but are you saying  just pay $45.00  an leave a balof $5 so that the CRA sees im using it at the 1-10% utiliza????? but if i do that im going to have a balance + interest fees, which is what I Don't Want , , i thought we want the CRA to see $0 bal?? 

so now im confused... i do want my score to increase, not drop ...am I understanding this right

[Anonymous]

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@Jerzee123 wrote:

Im trying to understand this clear also (because im trying to rebuild my credit )(build my scores)..

I thought we want all credt cards to have $0 balance in order to avoid paying the high interest.. but your previous response was to leave a few dollars as a balance to show utilization......

so example : lets say i have

2 credit cards..Cap 1 CL $300 and JCPenny $250CL

I use JCPenny and purchase an amount of $50...i get my statement and it says Minimum Due $25.. Ioff the full bal of $50 was the idea.. but are you saying  just pay $45.00  an leave a balof $5 so that the CRA sees im using it at the 1-10% utiliza????? but if i do that im going to have a balance + interest fees, which is what I Don't Want , , i thought we want the CRA to see $0 bal?? 

so now im confused... i do want my score to increase, not drop ...am I understanding this right

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Letting a balance report and carrying a balance are two different things.

Suppose that your monthly statement date is the last day of the month, and the due date is the 25th of the following month.

Suppose that you make a $100 purchase on the 15th, and the statement is issued on the last day.  In this case a $100 balance will report to the credit bureaus.  If you then pay that balance off before the 25th of the next month, you won't owe any interest.

If you pay the minimum due by the 25th, then you are carrying a balance and will owe interest, and you will typically lose the grace period on new purchases.

Once you're in balance-carrying mode, it typically requires two cycles to clear things out, because of residual interest.

If you want to control the balances shown on your reports, for purposes of optimizing utilization and scores, then you may wish to make a payment before the statement date.

Letting one card report a small balance, with others reporting $0, tends to optimize scoring.  In my case, the difference is around 10 points.

[nanrod98]

Well - this stupid bank-run system designed to penalize the young so as to charge more interest just dropped my score from 810 to 788 because i transfered from a family plan to my own Verizon account. Unfortunately this system should be illegal - but the USA condones such nefarious behaviour - write to your congressmen - on second thoughts don't bother they are all on the take from these institutions.

I'm not signing up again for this score notification - i loath the entire system and this notice, so called service that just confirms how corrupt and stupid this system is.

And I never want to borrow - ever - having an internet account, a home alarm or phone account is not borrowing - it's call living in 2014 for gods sake.

James