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Question By
Anj542012

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Why would by account drop from paying off an account in full?
The account was for furniture but we payed two payments and opted for the 90days same as cash so I paid off the amount and closed the account fully owning our furniture. After doing this my score dropped 32 points why would this happen if the account was in good standing and paid off in full way ahead of time?

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Top Contributor
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Because you now have fewer

active accounts. 

Credit scores are based on how well you manage your accounts, Lenders want to see you take out credit and use it as long as possible.  If you pay it off with in 90 days, then the algoritum see's it as you not needing the credit in the first place.  Remember they are all trying to make money off of you, so paying it off makes them no money. They see this as bad.  

The reality is that it should have an effect for only a short time.  The account should report closed, paid in full with in a month. You should also see your score bounce back in a couple of weeks as well. 

Good luck

Good luck

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Reply by
zevus

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I think you're off there ..... in that his credit score likely increased, after opening the new installment loan.  The decrease likely reflects the fact that this installment loan is now paid off.  In the end, the score will likely end up just a few points higher, from the credit report showing this +1 line of credit (until it falls off in ten years).

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