Why does your credit score drop after you pay off all outstanding debt?

To make you go out buy something else. All a ruse

If it's a revolving credit item (credit card) you paid off, it doesn't hurt your credit.

If it's an installment credit item (house, car, etc) it hurts your credit because one of the metrics used to measure credit score is "age" of open accounts. The lower the age of your open accounts, the more negatively it affects your credit.

My score dropped about 15 points when I paid off my house, because I no longer had a 10+ year account on my credit, which lowered the average age of open accounts.

Ridiculous, but why it happens.

Credit score is a score of how good you are at paying debt. No debt, nothing to score.

I don’t even care what my credit score is anymore. Some folks think that you measure others’ credibility by their credit score! Bullchit!

Mine has been at 750 for years + or - 15 points. I can’t figure out how to get it to move. I’ve paid off all debt but house and car and it didn’t effect it much at all.

In the last year I have paid off my house, tractor and UTV. My credit score was in the 800s and is now in the 770s. You would think it would go up because I've shown myself to be a good risk and now have extra money for monthly payments. Jokes on them though. I'm saving all that money and don't plan on borrowing ever again. I'm old enough that the stuff I have now should last me until I die or get so old I don't need it any more.

Credit card math is weird the way they figure risk. Normally it's a utilization rate issue on a credit card even if it's paid in full each month. Otherwise, could be a series of little things that make scores change. Credit score is important (good - great credit scores is a 150 point range), but not as much as debt to income ratio.

Mine was over 800 but I paid off a car and a small CC and it dropped about 40 points to 780. Doesn't make any sense. It should have gone up cause I paid my bills, but it went down.

Agreed but I don’t think the big 3 utilize debt to income while figuring the score. Otherwise paying debt off would have a positive effect

If you're credit score is above 750ish it doesn't matter much past that.

Right. I meant that in the real world, buying stuff on credit or getting loans for big items looks at that ratio as a significant factor...I'd say more than credit score (as long as it's in the good to great range).

This is a million dolla question. Mine has been 800 +/- 10 points for the last ten years and I honestly have no idea what drives it. I’ve seen it fluctuate at times I’ve never bought or had any credit checks ran.

because they didnt get to earn the interest off of the debt for as long as agreed usually. i paid my truck off 2 years early and my score went from 760 to 725 doesnt take but a few months to rebound though.id rather take the hit and save some money than keep throwing away money on interest especially if i dont plan on making a large purchase in the next year.

If you have insurance, a mortgage, or gotten any unsolicited credit card offers, somebody is running your credit.

I paid my little farm off a few weeks ago (5 years early) and my score dropped to 690. Pissed me off but I have very little to zero need for credit now anyway.

Sorta true. If you have credit cards with a zero balance, that's just as bad as having one with over 30% utilization. The magic number is utilizing about 5-9% of your credit cards to get the best possible impact on your credit. So if Skinny paid his cards off to a zero balance, it will make his credit score drop if his balance was zero at the time they reported to the CA.

And this, once you get to about 720ish +, you're good to go anyways.

Credit score math makes no sense. Wife and I both have credit scores in the 800s. Haven't had a car payment for 20 years. Wife just financed a new car, credit score went up????????