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Question By
SuperAwesome

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Why do scores go down?

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I am beginning to believe that paying off debt only reduces your credit score. This enables Large Loaners and Companies to increase rates and force you to spend or borrow more at a higher interest because your score goes down. Its all dictated too by Economics. I pay cash, use private lenders and personnally no longer participate in this low mentality rut of basing my life on Credit scores. 

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Helpful to 6 out of 8 people

Score went from a 738 to a 656 in less then one month. biggest dip I have ever seen, but yet My monitored monthly acct with "Experian" Score has risen. I didnt pay off debt, besides adding one credit card and my score was decreased. CreditKarma or Transunion is really difficult scoring system I take.

Reply by
eazyigz

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10 People Helped
Helpful to 9 out of 12 people

Same here - my score dropped from 799 to 667 in one month. I am totally clueless as to what caused this drop, as I have no delinquent accounts or payments at all.

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It all seem like a scam

Helpful to 4 out of 7 people

I've been attempting to rebuild my credit as I turned into a "Ghost" (Had a 0 real credit score when I went to finance a new automobile). I checked my scores here & at the bureaus and they showed I had a 630 score!!!  Well now I've got a cosigner, and have been paying these loans for 6 months..  My credit scores reported to me by the bureaus and here at creditkarma have all dropped 70 points or more... WTF?  And surprisingly I still have a 0 auto credit score?  On 2 auto loans paying early every month & still at zero..  What a joke...   What's the point of opening up loans and making payments only to have your credit scores drop....

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Helpful to 11 out of 14 people

This happened to me. My credit has been the same for 1 year, no late pmts, only difference i paid off my all my credit cards, which are still open acccts. my credit score on credit karma in Feb was 664, after i paid off my cards it decreased to 644. I don't understand how paying off debt can decrease credit score. Like i said no lates, no inquireies all that stuff

Reply by
VRoman0

6 Contributions
44 People Helped
Helpful to 8 out of 12 people

A simple answer: having 0% balance hurts your score. To get the highest score possible you need 1-10% balance on all your credit cards.

Reply by
rhapsodia

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Helpful to 1 out of 1 people

I think you still need activity monthly just no balances

Reply by
qz2026

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Helpful to 22 out of 23 people

I personally think this whole "credit score" is a bunch of baloney.  When I purchased a vehicle for my son about six years ago, because I was a cosigner, they had to check my credit score.  The dealer laughed when the score came back at 830.  During that time and previously I had refinanced several mortagages and purcahsed several cars.  So (being when I was working and trying to survive) I was in debt but was never late and always paid them off early or on time.  Thus, the good credit score.  Now being retired and in absolutely no debt, my score has gone down to 754.  Why?  because I don't use credit anymore.  I may use a credit card but pay it off monthly if there is a balance.  I guess this doesn't bother me since I will never borrow money again but your credit score does impact other areas such as insurance.  The lower the credit score, the higher the premiums.  Anyway, I am glad I am out of this rat race.  So, credit scores only go up if you are (1) immersed in debt and (2) paying it off.  If you simply pay it off and try to get out from under debt, your credit score decreases.  It's all a racket.

Reply by
jiculp54

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Helpful to 0 out of 2 people

I absolutely agree.  The fact that you are penalized by a lower credit score for being responsible and paying off your debt is ridiculous. This happened to me. I paid everything off and my score dropped.

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Helpful to 1 out of 1 people

yea me too. I paid off EVERYTHING for about 3months after opening a credit card account and when I checked my score here, it actually lowered my score.

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Reply by
JohnHoer

91 Contributions
222 People Helped
Helpful to 2 out of 2 people

I think that the rules have been changed in the middle of the game.

Reply by
dreamunderstars

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7 People Helped
Helpful to 4 out of 5 people

Well since I've been paying off some debt and collection amounts since August of this year, I went from a 628 to now a 546!!! Might have well not paid up at all.  Its very discouraging... still waiting for a point increase.. :(

Reply by
Meeks08

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Helpful to 1 out of 2 people

i just paid off four outstanding medical bills from my credit report that I had been told 1 year ago that they had been paid by insurance and would be removed from my report. Checked before applying for a mortgage and they were still on there so I paid them all off and my credit score dropped 40+ points. Wtf!?! 

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The truth

What I have found out in the last few months is that credit scores are for people who actually live off of credit.  If you are trying to get out of the vicious cyle of using credit cards, loans, and paying off your mortgage and cars then  the credit score is going to have a negative affect.  I have been listening to Dave Ramsey who is a financial expert that shows you how to pay off all of your debt and live on cash.  He has stated that he does not have a credit score because he does not use credit, he pays cash for everything.  If you want more information go to daverasmey.com.  I hope this was helpful.

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Control

Because the credit reporting system is FLAWED. My score was 770. I had student loans that I'd paid on for 10 years. Good long credit history and on time payments that the system likes to see. I saved 3% interest by using a vehicle I had paid off to secure a loan and pay off the 6 student loans. Essentially did my own consolidation. Well, saving money and being responsible and intelligent don't always equate into higher scores (FLAW). I think the other FLAW is in the fact that that aged and timely paid loan history isn't still propping up that score.

It's a system that rewards not only being in debt to the creditors, intelligently, but one that is sometimes counter-intuative to actual good fiscal decision making on your part. In the end...making good choices financially (like I did reducing my debt by lowering interest) may hurt your score...it's the right thing to do. Oh, by the way...my score dropped to 760 once my student loans reported closed. Silly.

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Why??

I have been monitoring my credit score Slowing trying to rebuild after my divorce and paying off my debt. Nothing has changed except the balance owed on the equity loan went down and my score dipped 15 points. Dropping me back into Needs Work:( this is disheartening  

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0 People Helped

if you have no debt they go down

When you are paying off your debt, the lower your debt to available credit available will drive your score up.  but give it two months of no debt, the score will drop and if you continue for about a year like that, your score will go away.  This thing about a credit score is a scam to keep the banks fluid.  It is a I Love Debt Score.  I stopped charging 3 years ago (and carrying a balance 3 months ago). Score became maxed out, but now it has dropped (even though there are no bad marks for over 10 years). Only outstanding debt is a home equity and a mortgage and those have no bad marks on them either.  These credit monitoring sites and the big 3 reporting agencies just brainwash us into thinking that we are successful if we have a high score.  What is better is if you have cash.

Reply by
eazyigz

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Helpful to 1 out of 1 people

So is there a solution to this problem?

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0 People Helped

I too have had the same experience with my credit score. I have paid down all four of my revolving accounts and  three installment loans almost paid off no late payments no inquirries no new accounts no missed payments no collections etc.. Basically nothing negative.. But still my credit score drops I check my credit reports from all three bureaus every month nothing appears wrong but I dont understand how paying down or paying off debt causes my credit score to fall. It seems to not make any sense how is it possoble for one to have a credit score in the high 700 with this kind of scoring system?

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