Why did my credit score drop 40 points after paying off debt?

Home (Live) › Forums › Credit Reports & Scores › Why did my credit score drop 40 points after paying off debt?

Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • July 30, 2023 at 9:20 am #9959
    StellarFi
    Keymaster
    July 30, 2023 at 9:22 am #9965
    Team StellarFi
    Moderator

    Paying off any debt reduces your credit score by a few points because it affects the average age of your credit account. The effect is more if it is an older account.

    Once your debt is paid, the account is closed, which also affects your credit mix. In addition, if it is a credit card account, your credit utilization rate increases, which further adds to the drop in your score. However, this is temporary. It is always a good thing to close off debts because it reflects well on your credit behavior. Lenders may see the successful payment of a loan as a positive sign and responsible credit behavior.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.

StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Build credit with every bill you pay.

With StellarFi, your bills are paid on time and reported to TransUnion®, Experian®, and Equifax®.

Raise Credit Score by 150 pts

Credit score increase based on StellarFi member data. Credit score increase not guaranteed. On-time payment history can have a positive impact on your credit score. Nonpayment may negatively impact your credit score.

Get Free Credit Score 2

Related questions

Home (Live) › Forums › Credit Reports & Scores › Credit Reports & Scores

Viewing 15 topics - 1 through 15 (of 223 total)
1 2 3 … 13 14 15
Viewing 15 topics - 1 through 15 (of 223 total)
1 2 3 … 13 14 15
  • You must be logged in to create new topics.
Company
About Us Pricing Partner with Us Careers Press
Resources
Blog Offers
Account
Sign Up Login
Build Credit with Every Bill You Pay.
© 2023 StellarFi. All right reserved.
Privacy Policy Terms of Service

Credit score increase based on StellarFi members’ data. Credit score increase not guaranteed. Credit scores will only be available to members whom we are able to validate. On-time payment history can have a positive impact on your credit score. Nonpayment may negatively impact your credit score. Failure to make monthly minimum payments by the due date each month may result in delinquent reporting to credit bureaus, which may negatively impact your credit score..