Why does paying off your debt lower your credit score?
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The credit bureaus look at what is called “Credit Utilization”. They want to see the amount that you owe below roughly 30% of your available credit. Having no amount owing compared to your available credit does not provide them with any actual tracking of how responsible you are in paying your debts, if you actually owe nothing. Seems counter-intuitive but this is my basic understanding that owing *something* and keeping on top of your actual utilization and debt is better than owing nothing at all.
I may be completely out to lunch on this, and I too would appreciate further clarification if anything I’ve said is inaccurate.
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