maxf33•5mo ago

My credit score dropped 40 points for a dumb reason

I paid off a small card with a $500 limit last month, thinking it would help... but my score actually went down. The credit bureau said closing the account lowered my total available credit and shortened my history. I had that card since college in 2015, so it was my oldest account. Has anyone else had their score drop after paying something off?

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4 Comments

murphy.tessa5mo ago

That 2015 card was probably your average age of accounts anchor. My oldest card is a 2012 store card I never use, but I keep it open with a $1 recurring charge set to auto-pay. The system really punishes you for closing accounts, even when you're doing the right thing by paying off debt. It's backwards, but now I just put a small subscription like Netflix on my oldest cards to keep them active without having to think about it. What's the oldest line of credit you have still open?

4

ivanbell5mo ago

Heard that trick works (keeps the credit history alive).

2

diana_kim665mo ago

Totally did the same thing with an old card from college. Stuck a cheap Spotify subscription on it and set up auto-pay. That account age is way too important to let go.

2

smith.parker3mo ago

I saw a Clark Howard segment on this a few years back (the guy's basically a money guru) and he said closing old cards is one of the biggest mistakes people make. He pointed out that your credit utilization ratio matters too - like if you close a $500 card and only have one $500 card left, maxing that one out looks way worse on paper. My buddy's wife closed a 2010 Target card and her score dropped 55 points because it was her oldest account by a mile. Now she keeps it alive with a $3 monthly donation to Wikipedia through auto-pay.

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