Why Paying Off My Credit Cards Tanked My Credit Score (And How I Fixed It)

It sounds crazy, right? Paying off your credit cards should boost your score, not hurt it. But that's not always how it works. I learned this the hard way, and today I'm sharing exactly what happened to me—and how I got my score back on track.

The Shock: My Credit Score Dropped After Paying Off Debt

When I finally paid off the last $5,000 of my credit card balances, I expected to celebrate a huge jump in my credit score. Instead, two weeks later, I checked my FICO—and it had dropped by 32 points. I thought it had to be some kind of mistake.

Why It Happens: The Truth About "Credit Utilization" and "Account Age"

  • Closed Accounts: I had paid off and closed two older accounts, not realizing that account age is a big factor in my credit score.
  • Credit Utilization Changes: Even though I had less debt, my total available credit shrank—making my credit utilization percentage spike upward temporarily.

Basically, in the eyes of the credit bureaus, I looked riskier even though I was doing the right thing financially.

How I Fixed It: Real Steps That Actually Worked

  1. Stopped Closing Accounts: I kept all my zero-balance cards open to maintain my available credit limit.
  2. Used Small Balances: I started charging small monthly amounts (like Netflix subscriptions) to keep the accounts active.
  3. Disputed Minor Errors: I found a wrong address listed on my report and corrected it—small errors can actually hurt your score!
  4. Patience: It took about three months, but my score not only recovered—it rose by 48 points overall.

What You Should Know (Before Making the Same Mistakes)

Paying off your cards is always a smart move. But closing accounts? That can backfire. If you're thinking about paying down debt, keep those accounts open and active unless there's a good reason to shut them down (like fraud or insane fees).

Final Thoughts: Progress Isn't Always Linear

Rebuilding credit is full of weird rules and unexpected outcomes. If you're patient and strategic, though, you will see results. I'm living proof that even after a score drop, recovery is absolutely possible—and you’ll come out smarter than ever.

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