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Saleen88

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Why does credit score go down when all debt is paid off?

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Question is too vague.  Your credit score doesn't go down when all debt is paid off.  Different debts are seen as having different levels of risk.  Installments are low risk and add to your mix of credit.  Revolvers (e.g. credit cards) are seen as higher risk.  Your score acutally improves as long as you decrease your revolving utilization.  However, there is a bit of a hit for having all your accounts report with zero balances.

There are a number of factors that go into your credit score and you cannot rely on broad oversimplifications like "paying off debts reduces credit score".

Top Contributor
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If you pay off and CLOSE accounts, your score will be reduced because you've closed a postive tradeline that contributes to your credit profile. I know, it doesn't make much sense, but unfortunately that is how it works. Also note, on credit cards, always let one card report a balance each month at statement time, so you are not penalized for no revolving activity. You can pay the credit card off before the due date, but show a small balance (less than 10% of your credit line) on the statement date.

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