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Why is my credit score dropping when I'm making payments on time?
I initially opened an account with Capital One in June because I had a thin file since I haven't needed credit in years and do not need it now but thought I might in the future finance a newer car so I needed to reestablish myself. When Capital One reported my first payment was on time my credit score started around 678 which wasn't bad since I haven't used credit in so long. The balance the first time they reported was around 10% of my limit. When I received my statement I immediately paid that bill. The next month my usage was 24% which was a little higher since I got fuel shortly before the cut off date. Again the moment I got my statement I paid the bill. When I checked my Equifax score it went down 12 points because it said my balance went up about $31.

Why would my score go down if I'm making all payments on time?

This lead me to think Capital One reported my new monthly balance but didn't report I paid the previous month but when I checked each month they both say I'm ok and current with no late payments.

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Top Contributor
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Credit Reporting

Helpful to 3 out of 3 people

This is a tricky part about credit reports and credit card companies.

Credit cards report your current balance to the reporting agencies on the statement closing date, not your due date.

So when you get a new statement from Capital One, that is the balance that will be reported to the 3 agencies.

Your score will be directly affected by both your available credit and your payment history.

It generally works like this:

0-10% = excellent

11-29% = good

30-49% = fair

50%+ = Bad

So, if you want to keep your reported balance in the sweet spot, you need to pay it BEFORE the STATEMENT date.

At the same time, you want to report a minimal balance to the credit agencies so it doesn't look like you're not using your credit at all.

Personally, I like to pay down my total balance under 10% right before the statement date and then pay it off by the due date.  This will show good credit usage for the report, but keep your interst payments at zero.  You end up making two payments a month, but it will help your rating in the end.

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