Question

Hi guys, i need some advice/ help. I became debt free in early February. Woke up today and my credit score dropped from 761 to 646. Does anyone know why ? I’m panicking because my goal was to buy a house in the near future . What am I suppose to do ? I thought paying off debt would increase my score  

Answer 1

Its goes down once everything is paid off, but it will go back up in the next few months. That is what I have seen.  

Answer 2

It dropped for my husband too when we paid off his car.  

Answer 3

What type of debt was the last paid off one? Creditors want to see a healthy management of revolving debt ie credit cards vs installment payments like a car, that and length of time on each account may have to do with it

Comments

@find501 my car loan was the last debt paid off

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So your score should bounce back and then some within the next 60 days, it just took a temporary hit because your “average age of credit” might’ve taken a hit depending on how long your car loan was

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@find501 thanks

Answer 4

Honestly I don’t get it either right before I made my last car payment it dropped 40 points. It’s a scam we have to live by with no real explanation to the regular working people :/

Answer 5

Did the app tell you why? Mine always explains why there is a change in score.  

Answer 6

You have no “credit” because there is no usage. Not uncommon. Charge something small and pay it off. Or use it to pay a reoccurring charge Netflix or gas or another bill and pay it monthly. Transunion is the worst with this. I paid of several small credit cards and my score with them dropped 80 points while the others stayed the same as before or increased

Answer 7

Your credit score is based on debt. no debt, no score.  

Comments

@cobalt um, no. Not exactly. Perhaps you no usage?  

Answer 8

If you click on your Transunion score there should be a spot that says “show me what changed. ” If there is no specific reason then it’s likely because you lost your mix of credit lines/loans since you are 100% debt free.  

Answer 9

Because you don’t have any consumer debt.  

Answer 10

Keep in mind that 1. Credit karma isn’t accurate. Pull your actual credit report. 2. This is normal. You no longer have revolving credit so it’ll drop for a bit before going back up.  

Answer 11

@presently I literally just submitted a post about this as well! It’s so frustrating but I’m curious about the various thoughts that members will offer.  

Answer 12

Credit karma isn’t your real score! I used to go crazy looking at credit karma. Until I finally understood credit. I don’t know what state you’re in. Find out which one your state pulls it depends what part of usa your from. In the state I’m currently living in pull experian. Go to free credit report. com do the 7 day free trial cancel it and they let u keep your free membership so u can check your score on a monthly basics. Don’t reply on credit karma it isn’t accurate.  

Comments

@mead2735 will look into it thanks

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@mead2735 Credit Karma is accurate- it is reporting TU and EQ, but it isn’t reporting FICO. Different reports; different numbers.  

Answer 13

Credit karma is not even close to your actual score. Mine was off by 130 points when my credit report was pulled to buy our house

Answer 14

Credit karma was off by about 100 points (it was lower than my actual score) they are all over the place on credit karma. You can get a free credit report from each agency once a year and you’d get a better gauge from your FICO score

Answer 15

I think Dave Ramsey explains this

Comments

@permute51787 Dave Ramsey doesn’t believe in scores. He believes in manual under writing

Answer 16

I recommend using myFICO rather than credit karma that is your vantage score. Your score will always drop when paying your balance down to $0 . It will slowly increase over the next few months

Comments

FICO can be a free service on credit cards. See if one of your cards already have it.  

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@conatus mine don’t .  

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@conatus Citi and US Bank cards offer FICO Scores!  

Answer 17

Get a free copy of each one of your reports to see what’s there. Make sure it is accurate

Answer 18

If you closed any accounts your score will drop

Answer 19

I wouldn’t depend on credit karma for a true depiction of your credit. Lenders will look at your FICO score which credit karma does not provide. Experian has an app that you can use, it gives you both scores. Also recommend keeping small balances so the creditors are reporting something.