Why did my FICO score drop 11 points from December to now? I paid off a $7,000 loan at the start of December. Then, since December, I’ve put over $1,000 towards another debt. So, I’ve reduced my debt by $8,000. No new debt has been added. Yet, my credit score went down. I don’t get it.
Why did my FICO score drop after paying off debt?
- Thread starter PecanPwnd
- Start date
Cluckinator89
Member
Most likely, it's because you paid off your personal loan. When a loan is closed, it can lower your credit score. Your score should rebound in a few months. Just keep doing what you're doing.
Breadzilla
New Member
Your personal loan was closed. The main factor affecting your credit score is the ratio of available credit to used credit. Aim for 30% utilization or lower for the best results. Since loans are not revolving credit, paying off the $7k loan significantly reduced your total available credit. It will rebound over time. Just wait a few months.
DaybreakRenewal
New Member
Your credit score may decrease when you pay off a loan. This decrease is temporary and typically rebounds within three months. Loans impact credit scores differently compared to credit cards.