What did I do? Paid off CC - Lowered Score 32pts

[Anonymous]

I have been trying to rebuild credit and had gotten scores up to the high 600's and low 700's. Took out a new Amex card and had to charge a few thousand on a home repair last month, then just paid it almost all off. I took the credit utilization from 70% of available to 5% available. 

I was anticipating a decent bump up in scores, but not it has declined by 32 points.  What am I missing here? Thanks in advance for your help.

[Anonymous]

Can I do anything to reverse this, prevent this in the future etc? Thanks

[Anonymous]

There may be a terminology issue here.  You say that you have taken your Amex card from 70% available to 5% available.   Let's suppose that you have a $1000 credit limit to see concretely what that means.

You say that your card was at 70% available.  That means you had 70% of the credit line still available to make charges.  That means that your balance was $300 out of $1000.

Then you took it to 5% available.  That means you had 5% of the credit line still available to make charges.  That means that your balance was $950 out of $1000.

When you take your card to a place of a low balance to a very high balance, your score drops.  That's normal.

If that is not what happened, it means you have accidentally miscommunicated to us what did actually happen.  Better would be to tell us your balance and credit limit at the different time points.  What ultimately matters is the balance at the top of each of your monthly statements (the balance fluctuations in between statements won't matter).

[Kree]

I think you misread OP.   took utilization from 70% of available would translate to  It was at 700 of 1000,  to 5% of available 50 of 1000.

I believe you read it without the 'of'.

OP,  was this all within the last month?  A new card reporting could lower your score, as it lowers your Average Age of Accounts.  And your Age of Youngest Account would be 0.  Likewise an inquiry would lower your score as well if you previously had 0.

Also are you sure it reported as 5%? it could have reported just before you made your payment.   Additionally, if you only have a few cards, the 5% on this one could have increased the percentage of your cards with balances, which can also lower your score.

[Anonymous]

Hello Kree!  You are probably right about what he meant, it's just not what the OP said.  A lot of people use the word "available" when that's not what they mean.  If a person's available credit is at 70%, then he's got $700 dollars available out of $1000 (assuming $1000 limit say).  The definition of Available is

Available = Limit - Balance

Anyway, it's just a terminology issue.  We can find out better what he meant and what his actual situation was if he tells us his credit limit and the last couple statement balances (along with the statement dates and the dates he pulled his score).

[Anonymous]

You've only given us one data point, which is not enough to help you unfortunately.

Can you answer the following questions?

1. Where are you getting your credit score(s) from?  Website?
2. Are you sure that your new 5% balance has reported?  Is it possible that you're still pulling reports reflecting the old 70%?  Amex is interesting because they usually don't report the first statement at all but then report the second statement balance so it's possible you mistimed your report pull.
3. Is that new Amex card the only new card you've gotten in the past year?
4. How many other accounts (credit cards, loans, etc) do you have on your reports?

Answering those questions can help us better.