Credit Health
The Credit Score
Paradox
Paying off debt can sometimes make your score drop a few points temporarily. Here's why it happens, why it doesn't matter, and what actually moves your score long-term.
Utilization is King
30% of your FICO score is determined by your "amounts owed." Specifically, your credit utilization ratio. Paying down a large balance on a card with a small limit can give your score a massive, immediate boost.
The "Paid Off" Dip
When you pay a card to $0, your score might drop a few points. This usually happens because of a shift in how the algorithm treats zero-balance accounts or a change in your credit mix. It's temporary. Your long-term financial health matters more than a 5-point fluctuation.