Why does credit score drop after paying off a loan?
In: Other
Total credit available is a factor. Case in point I was holding a withdrawn CC that was in runoff at tens of £ for ages, paying the minimum monthly, specifically to maintain my credit score. When it was finally fully paid off, the account closed, my total credit available (from the point of view of the credit ref agencies who are apparently unable to distinguish between normal CCs and those in run-off) dropped by £10k and my credit score fell. That seems counterintuitive when you just paid off a debt, but it is how the system works.
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