I paid off all of my debt. The only thing that has posted so far is one credit card. My credit is good 756. I recieved an alert that my credit score dropped by 8 points because the credit card was paid off. I have been reading everything to figure out how the total scam of FICO works but cant find any reason my score should have gone down. Anyone have a suggestion on why this could have happened? The card was not closed nothing else has happened on my credit except that card being paid off. I was already only using about 10% of my available credit.
Hi Macjosh, welcome to the forums!
Is that score a FICO score? What monitoring service are you using to obtain your scores?
The only way FICO scores will drop from paying down an account is if you have all revolving credit lines reporting $0 as FICO will penalize for reporting 0% utilization. If this is not the case and we are, indeed, talking about a FICO score (not Vantage 3), then something else had to occur that caused the 8 point decrease (but not a new negative item given the minor decrease).
I recieved an alert that my credit score dropped by 8 points because the credit card was paid off. I have been reading everything to figure out how the total scam of FICO works but cant find any reason my score should have gone down.
Your alert did not say that your score dropped by 8 points because a CC was paid off. You got an alert of a change to your CR and were provided with a new score at the same time. The new score may or may not have anything to do with the alert reason. I'd also suggest that you adopt more of an open mind regarding FICO scoring. If you enter the game the the attitude that everything is a scam you're only going to inhibit your ability to learn and understand how it all works.
I am using myfico. I have been playing this credit game for a long time. I am a realtor and have attended many classes on credit trying to understand how it really works. I have been watching my credit bounce for many reasons. The biggest is paying off a credit card. I have heard it over and over that it will not drop becuase you pay off a card. That is simply not true. What it reported with not other changes is "The balance of one of your accounts has dropped $1789" then in red to the right a drop of 8 points. I have many accounts with a small balance on them. I have car loans. I have a mortgage on my primary residence and on a rental. I also have student loans. I have a wide varity of credit. I always pay on time. I have not asked for new credit. The only change that has been reported was that pay down.
I have been playing this game for far too long to keep an open mind. They want to give you a score that affects every aspect of your life but will not tell you the rules to the game. Therefore this is a scam there is no other way to put it! It is going to take someone with enough money to hire an attorney to finally sue all 3 bureaus and say enough is enough. I responded to another post as well but nothing else has changed on my credit and I have no negative items. I saw this same thing happen in September when I paid off debt. It absolutely will lower your score. My question really is why and what possible formula would there be to what debt to keep to maximize your credit. Like I said it would just be nice to know the rules to the game.
What it reported with not other changes is "The balance of one of your accounts has dropped $1789" then in red to the right a drop of 8 points. I have many accounts with a small balance on them.
From what you just said above, you've determined that it's impossible that your balance paydown caused your score drop. You said you have other [reported] balances, so FICO cannot hit you for a "no revolving credit use" penalty.
You're still not completely understanding the way the MF software and alert system works. You receive an alert when an alertable event (like a new reported balance) happens. You do not receive an alert for every change to your credit report, because there are plenty of events that are not alertable. They can still change your score though. You do not receive alerts for score changes, you receive alerts for credit report changes. At the time you receive an alert, you're provided with a new score at that moment. That new score many times has absolutely nothing to do with the alert you received. It does not matter that the red score change is to the right of the alert reason. This is MF's front-end software (poorly designed and misleading, IMO) telling you one thing and making you believe it is impacting something else.
Let me illustate how an alertable and non-alertable event could cause you be mislead as to the reason for a score change with this example:
On March 1, you had a scoreable inquiry from 365 days prior become unscoreable. This is not an alertable event. Your score on Feb 28 was 700. Since this March 1 event is unalertable, you don't know that your score is now (say) 705. 2 days later on March 3, one of your CCCs reports a new higher balance. You get an alert that the balance on one of your accounts increased $X. At the time you're provided with a new score, 705. Without knowing about the unalertable (inquiry) event, you'd wrongly believe here that your new higher balance actually increased your score 5 points, when that's in fact an impossibility.
I have been playing this game for far too long to keep an open mind. They want to give you a score that affects every aspect of your life but will not tell you the rules to the game. Therefore this is a scam there is no other way to put it!
The "rules of the game" are laid out nicely on this forum by the many members that have contributed their time over the years. While it's impossible to know 100% algorithm works, the feedback from many over time has cracked the code in many ways. I'd suggest you do a lot of reading on this forum and you'll learn everything you've ever wanted to know and then some involving credit and FICO scoring. It's 100% not a "scam" though and the first thing you need to do is throw that thought out the window, otherwise it will impair your ability to learn and move forward.
An all-zero penalty imposed usually results in a > 8 point drop.
OP, you still didn't mention if you paid down the account or paid off the account and you also need to let us know if you have other revolving accounts with non-zero balances.
@macjosh, can you confirm how many of your accounts are credit cards?
Non-card balances don't affect the revolving portion of your score. If all cards report balances of zero, you're penalized. As BBS mentioned, it's usually more than 8 points.
Just to throw out an idea, I think you may be experiencing the "all cards at zero" penalty and that it may be offset by something aging. Maybe you reached an AAoA (average age of accounts), AoYA (age of youngest account), or AoOA (age of oldest account) threshold. Or maybe an inquiry become unscorable.