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Question By
robertur

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Why Did My Credit Score Drop After I Paid Off My Car?
I have two cars and about 20k in credit card debt. Although I make good money I was denied for a loan last year and trying to improve my credit score. I am getting about 100k ovr the next three months that I am dedicated to paying off any debt. I took the first check and paid off my first car- about 12 grand and put 3k towards the credit card debt. My score DROPPED 31 points. I did a calculator onsite and forecasted if I paid the rest of the credit card off it wouldn;t change my score at all- how reliable is the calculator? If I pay off the credit card, I will only have one bill- the second car. Should I pay that off too or try for a home loan with it still on the account and put the money towards a new home?

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When you close accounts, your scores will usually drop, so that is typical. I would not close any more accounts. You did not say what the utilization rate is on your credit card, but unless you are utilizing very little of your credit line I would say that the calculator you are using is not good. I highly recommend that you watch your FICO scores as lenders will be most likely to use a version of them. It sounds like you don't have too many lines of credit and that may not be a good thing, but you should not open any new lines of credit if you are going to be applying for a mortgage soon. You really need to take some time and start reading everything that you can on the subject of credit. Read and educate yourself FIRST before you take any more action. If it takes you two or three months to learn what you need to do, then take the time and wait before you do anything else as mistakes can be very costly in this game. Any questions along the way, please ask and we will try to help you.

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