Credit question

TeamH5

DIS Veteran
Joined
Jul 24, 2011
Messages
634
i hear a lot of people say they pay off their credit cards every month. I was, until I got hit with a lot of unexpected car repairs. I used my zero interest card, and carried the balance for a few months until I could pay it off. During that time, my FICO score jumped about 50 points. I figured it would go up more when I paid it off. Paid it off, my score DROPPED 30 points. How does THAT happen?
And... how do you keep your credit score high and pay off your cc debt every month? I'm currently (with the drop) sitting in the mid 700 on my FICO score.
 
i hear a lot of people say they pay off their credit cards every month. I was, until I got hit with a lot of unexpected car repairs. I used my zero interest card, and carried the balance for a few months until I could pay it off. During that time, my FICO score jumped about 50 points. I figured it would go up more when I paid it off. Paid it off, my score DROPPED 30 points. How does THAT happen?
And... how do you keep your credit score high and pay off your cc debt every month? I'm currently (with the drop) sitting in the mid 700 on my FICO score.
Mine is high (> 800) because everything is paid on time in full (nothing late at all) and my credit utilization ratio is very low.
 
While I'm not an expert, I'll tell you what I do. I check my credit score at least once a month, just to make sure no one is messing with my stuff and because I do have a joint cc with my partner, which I don't use and he only uses for business purposes. I have two ccs one of which I pay off every month and another that is older than dirt and I used to use it to live off of when I was a single mother and it was the only way to pay the bills and make sure my son was clothed. The balance on it got pretty high. I have always paid more than the min. due on it and stopped using it years ago. When I look at my credit score if there is any significant change, I drill down into the details to see why it changed. Usually it's something like when I bought my car and was shopping different dealers and they were hitting my report or my honey hasn't paid off the balance on the joint card and it's over the percentage (I think it's 20%) of the limit that they consider excellent. When I drill down, there will be recommendations on how to pull the score up so maybe you should look at that. I use Credit Karma which is free.
 
Mine is high (> 800) because everything is paid on time in full (nothing late at all) and my credit utilization ratio is very low.
Same thing here. The highest my cc ratio got was 35% and that's when my score went up. But I've got years of on time, no late payments, etc.. I'm just floored that my score would go DOWN for paying off my cc and making my utilization lower..
 

While I'm not an expert, I'll tell you what I do. I check my credit score at least once a month, just to make sure no one is messing with my stuff and because I do have a joint cc with my partner, which I don't use and he only uses for business purposes. I have two ccs one of which I pay off every month and another that is older than dirt and I used to use it to live off of when I was a single mother and it was the only way to pay the bills and make sure my son was clothed. The balance on it got pretty high. I have always paid more than the min. due on it and stopped using it years ago. When I look at my credit score if there is any significant change, I drill down into the details to see why it changed. Usually it's something like when I bought my car and was shopping different dealers and they were hitting my report or my honey hasn't paid off the balance on the joint card and it's over the percentage (I think it's 20%) of the limit that they consider excellent. When I drill down, there will be recommendations on how to pull the score up so maybe you should look at that. I use Credit Karma which is free.
I use Credit Karma as well. That's what I had been tracking on.
When I looked, it says factors affecting your score, and the only thing that's got the down arrow is my cc utilization.. crazy.
 
Maybe it will take a little time for that to get adjusted. Several years ago we had a card with 0% for a year so I loaded it up to the limit and let it sit there for a year before I paid it off. That was a mistake because our insurance bill went up.

The only thing we get dinged on is the fact that we have no debt/loans. Mortgage has been paid off for over 20 years and we pay cash for our cars. Nothing I am willing to do to change that. Credit rating is high I guess for the reasons havaneselover mentioned. I did get denied by Chase last time I tried to open a new SW credit card because of the too many cards opened in the last 2 years rule. Will try again early next year.
 
We had our score drop 50 points after paying a car loan off early.
We are penalized with a higher rate by our auto insurance company for not having many loans/cards so we opened a few more cards (but pay them off every month) then this year were told our insurance rate went up for opening too many lines of credit.
There does not seem to be much rhyme or reason to the credit game.
 
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I do the same thing as Havanese, pay everything in full every month with no late payments and I'm above 800. I was at about 770 and then when DH and I bought our house last year and made our first mortgage payment, I jumped 30 points.

I understand your frustration though. My friend just paid off over 6 figures of student loans and his score dropped 50 points. DH is getting ready to pay off his car and I'm sure his will drop. I think in the long term of your credit score though, making on time and in-full payments is never bad.
 
Tracking your credit score almost seems like a fad now, and the last 10 years. I never bothered checking, we always qualified for the lowest mortgage and car loan rates so didn't see a need. I did do a free credit check once. I found it very confusing. I recognized all the loan amounts, but a lot of the lenders I had never done business with. Apparently if your lender gets sold, even if it is decades after your loan was paid off, the new owner's name is listed as the lender.
 
If you paid it off and now have a 0 balance reporting it will take a little hit due to the 0 balance. Doesn't seem like they should penalize you for paying everything off but unfortunately that is what the FICO scoring algorithm does.

Also, if you are looking at your scores via Credit Karma those are not true FICO scores. CK uses, I believe, a Vantage scoring model which basically no lenders use. I have used a credit monitoring service in the past which gave me regularly updated FICO scores and I saw up to a 75 point difference between my true FICO scores and the FAKOs that were provided by CK. The point of that being if you are just getting your score from CK the drop they show may not be the same as it is in your actual FICO score.
 
There is a ton of variation in credit scores because there are so many options. There are 3 main agencies and then several smaller ones. Each of the larger 3 have up to 16 different scores they keep track of. Fico 8, Fico 9, Vantage, Auto scores, and some even specifically for mortgages. The free credit reports are Vantage scores for the most part, however, banks and credit cards use the Fico 8 and Fico 9 scores. There can be many large differences them though.
 
i hear a lot of people say they pay off their credit cards every month. I was, until I got hit with a lot of unexpected car repairs. I used my zero interest card, and carried the balance for a few months until I could pay it off. During that time, my FICO score jumped about 50 points. I figured it would go up more when I paid it off. Paid it off, my score DROPPED 30 points. How does THAT happen?
And... how do you keep your credit score high and pay off your cc debt every month? I'm currently (with the drop) sitting in the mid 700 on my FICO score.

Your FICO credit score is actually determined on many things - but a lot of it is based upon how much credit you have and how much of that credit you use. If you have no debts and no credit cards, you can actually move your score to ZERO. If you pay off your balance every month that likely wont cause your score to go up.

With amounts owed making up approximately 30% of a FICO Credit Score, the amounts you owe on all your credit accounts may have a significant effect on your score. Your credit utilization rate is the percentage of amounts owed on all of your credit lines compared to the total available credit that you have on your credit accounts. If you are spending $900 a month on a card with a $1,000 limit, even if you’re paying it off in full each month, your FICO Credit Score will still reflect a utilization rate of 90% meaning it could actually go DOWN.

Honestly, if you want your score to go up - ask your CC to INCREASE your credit limit (or open up a new account) which will eventually lower your utilization percentage rate.
 

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