TransUnion Scored Dropped 23 points upon paying OFF debt

[debra3659]

Hello.

My Transunion FICO score was 705 due to high credit card usage to balance. I paid off about 90% of my credit card debt plus 2 mortgages recently. TransUnion FICO DROPPED 23 points. How? Why?

[Anonymous]

IF you no longer have any installment loans open on your credit report, your score can drop anywhere from 15 to 40 points.  This is normal.  Adding an installment loan back, like the Alliant SSL hack, will bring points back.

10% of your FICO score is for "credit mix" meaning that you have open accounts in a variety of types: credit cards, installment loans, etc.  If you are missing any of this mix, your score can drop -- for some people, a 6-7% drop isn't unheard of.

If you don't have any more installment loans to pay off, and you aren't expecting any, the Alliant SSL hack will cost almost nothing and stay on your report for 5 years for a few bucks a year in interest and only $50 security deposit after a few weeks.

[rmduhon]

A few questions. Where are you getting the score from? How many cards do you gave and what is the utilization on each.

[debra3659]

I am getting the score from myFICO.com updated yesterday afternoon.

I have 8 credit cards. Until 4/20/17 all were at about 95%+ utilization. 

On 4/20/17, I paid all the credit cards down to $0 balances with the exception of 1 card, no interest, and $2,500 balance. This card was new credit, but had already dropped my score down to the 705.

Previously, my total balance was about $31,000 on all the cards.About $1,500 credit remaining across all cards.

After TransUnion recognized that I had paid off significant debt (I received an alert saying so), they dropped my score from 705 to 682. Their explanation was that the "Total balances on all cards had changed." 

Experian and Equifax recognize various amounts of debt paid off and have increased my score 11 and 25 points.

[debra3659]

Thanks for the info. I do have a small car loan left.

[Anonymous]

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@debra3659 wrote:

After TransUnion recognized that I had paid off significant debt (I received an alert saying so), they dropped my score from 705 to 682. Their explanation was that the "Total balances on all cards had changed." 

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First of all, VERY NICE JOB paying down significant CC debt!

Second, the score drop you saw was not from paying down your credit cards.  The change in balances triggered an alert (as indicated by the reason you quoted above) and you got a new score to go along with that alert, but that score change has nothing to do with your balance changes.  If you paid down $30k in revolving debt that was at 90% utilization or so to something that was around $1500 in balances left and those number reported as such, you'd see a score GAIN from that change.  If your score went down, something negative was introduced... and I'd say it was something signifcant since you would have already seen a significant score increase from the utilization change.  I'd estimate that the event that caused your score drop was something to the tune of 60-70 points at least, probably more, since the utilization improvement is hiding a portion of the impact of your score drop from a negative item of some sort.

[debra3659]

Thanks for the info. I will look at my report for the change. I have not had any alerts like that. But, I will check again.