Why Did My Credit Score Decrease by 20 Points?

Quick Answer

Credit scores can decrease for a number of reasons, including high balances, missed payments and closed accounts. You can review recent factors that may be affecting your credit score by checking your credit score for free with Experian.

A woman wearing a polkadot shirt frowns while looking at her phone and holding her credit card.
Dear Experian,

My credit score decreased by 20 points and the only change was a payment on my credit card that brought the balance to zero. If anything, I would think the score would have increased. Please explain what may have happened.

- CCB

Dear CCB,

The lower your credit card balances, the better for your credit scores—so paying off credit card balances is a smart move for anyone looking to increase their scores. That said, there are many other factors that can influence scores, and the information in your credit reports is continuously changing as the credit bureaus receive new updates from your lenders.

Allow Some Time Before Checking Your Score

You should allow at least one billing cycle, or about 30 to 45 days, to pass before checking your credit score after a major change like paying off a large credit card balance. That will give time for the payment to be reported by your card issuer and your credit history to be updated.

A large change may also cause your credit scores to dip a bit for a short time. The reason is that a big change like paying off a large credit card balance creates instability in the score. Check again after a month or two, and, assuming nothing else has changed, your scores will likely bounce back up and begin to improve.

Closing Your Credit Card Account Can Hurt Scores

Your credit utilization rate, or balance-to-limit ratio, is the second most important factor in credit scores next to payment history. Utilization rate is calculated by taking the total of all your credit card balances and dividing that number by the total of all your credit card limits. Paying down or paying off a credit card will result in a lower utilization rate, which can raise your scores. However, one mistake some people make when paying off a credit card is believing that they should close the account once the balance is zero.

When you close a credit card account, you eliminate the available credit for that account. If you are carrying balances on other credit cards, closing the account you just paid off will likely cause your overall credit utilization rate to increase, which is a sign of risk. As a result, your credit scores may decrease.

Sometimes, there are valid reasons for wanting to close an account, even if it results in a temporary decrease in scores. For example, if you are in the process of getting out of debt and leaving the account open represents a temptation to accumulate more debt, closing the account may be a wise choice. Or, if you no longer plan to use the account and it has an annual fee, it may not be worth the cost to keep the account open.

However, if you are planning to make a major credit purchase in the next three to six months, it's probably best to leave the account open until the transaction is complete.

What Factors Impact Credit Scores?

It's possible that the reason for the decrease in your score was entirely unrelated to this particular account. For example, if you recently applied for and opened a new account or paid off an installment loan, those changes may have resulted in a decrease in your credit score. Any late or missed payments reported also have a negative impact on your scores.

The best way to find out what in your credit history is negatively impacting your credit score currently is to order your free credit score from Experian. Along with the score, you will receive a list of the risk factors that are affecting your scores the most at this moment.

If you haven't already done so, it's also a good idea to order a current copy of your credit report and review it carefully so you can see exactly how your accounts are being reported.

Paying attention to the individual risk factors listed with your score will help you gain a better understanding of how the information in your report is seen by your lenders so you can begin improving all your credit scores going forward.

Thanks for asking.

Jennifer White, Consumer Education Specialist

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