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KP0323

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Why did my score go down when I paid off all credit card debt AND increased my credit card line?
I just paid off a high interest credit card I've had for 10+ years, but I kept it open, knowing that it's not wise to cancel a credit card, especially after such a long time with it. I also increased another credit card's limit by 2k. That one is usually under 30% utilization. My scored dropped, not by a lot, but I'm unsure why it didn't go up since my overall debt AND my utilization went down substantially. Any advice on why and how to increase my score quickly?

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Congrats ! I'd just add this - one of my banks cut my credit limit as soon as I paid down the debt, which did wreck havoc on my total score. Its a low ball, but that's how the game is played. Since banks are not under any obligation to maintain your credit line and can adjust, shut it down just as you are able to shut it down. I wonder if when the bank increase the other credit card by 2K, if they did a hard pull on your report. I will say the Vantage 3.0 scoring model behaves a little weird compared to FICO and PLUS scores. I have stellar credit and I've noticed in flucuates with short-term changes since as paying off a balance. It also takes into account if you suddenly pay a high balance down after it being high for several months. Guess there concerned that you'll charge it up again. At any rate, I would worrry too much about it - your already doing the right thing.

As for raising your credit scores, I'd make sure I'd have at least two credit cards. If you use them every month, they stay active and boost your score in your credit mix. Just pay the balance in full every month - but be careful not to exceed 30% of utilization. Sometimes even if you pay the balance in full your credit report will show the balance on your statement. So what you can do to avoid this, is pay the balance on your credit card bill BEFORE your statement closes. That way it'll show a zero balance on your credit report.

Hope this helps !

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Hi KP0323, first of all congratulations on paying off that high interest card!  I'm sure it was a tough but satisfying accomplishment.  Your score going down is strange indeed.  I wonder if this had something to do with your credit increase.  Was it an automatic increase by the credit card issuer or did you request it?  If it was the latter, they may have done a hard inquiry into your score (which lowers your score slightly).  If it was an automatic increase, it might have been credit card related at all!  For example if you signed up with a new cell phone provider, they could also have done a hard inquiry.  Other situations where this may occur is if you've moved recently, purchased/leased a car, bought a house or refinanced a mortgage, etc.   

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I had that happen ten years ago, and my reply by my finance officer at my local bank was that unfortunately, by increasing my limit, I've also increased the amount of 'open debt' I can accrue which puts me in a higher bracket for my debt to income ratio.  I've also been told before that it's much, much better to make small consistent payments on a loan or finance account, rather than pay it off in one lump sum.

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How can I fix my poor credit score

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Reply by
mycabbages

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Helpful to 2 out of 2 people

Hi Michemcm, you should make sure to never miss a payment and to pay off more than the minimum amount due when possible. 

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