Why Did My Score Go Down When I Stopped Using My Credit Card? (2024)

To view important disclosures about the Experian Smart Money™ Digital Checking Account & Debit Card, visit experian.com/legal.

The Experian Smart Money™ Debit Card is issued by Community Federal Savings Bank (CFSB), pursuant to a license from Mastercard International. Banking services provided by CFSB, Member FDIC. Experian is a Program Manager, not a bank.

^øResults will vary. Not all payments are boost-eligible. Some users may not receive an improved score or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost^®. Learn more.

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As a seasoned expert in the realm of personal finance and credit reporting, my extensive knowledge allows me to dissect and provide insightful commentary on the intricate details of financial products and services. Having closely followed the evolution of the financial industry and the integration of technology, I am well-versed in the nuances of digital banking, credit scoring models, and the complexities of financial disclosures.

Now, delving into the specifics of the provided information related to the Experian Smart Money™ Digital Checking Account & Debit Card, let's break down the key concepts and details:

Issuer and Licensing: The Experian Smart Money™ Debit Card is issued by Community Federal Savings Bank (CFSB) under a license from Mastercard International. This structure is common in financial partnerships where a licensed bank manages the issuance of cards on behalf of the entity providing the financial service, in this case, Experian.
Banking Services: The banking services associated with the Experian Smart Money™ account are provided by CFSB, which is a Member FDIC (Federal Deposit Insurance Corporation) institution. This membership indicates that the deposits made into the account are insured up to the maximum allowed limit by the FDIC, providing a layer of financial security for the account holders.
Experian's Role: Experian, in this context, is described as a Program Manager and not a bank. This distinction is crucial, emphasizing that Experian is facilitating the program but is not the institution directly managing the banking services.
Results and Eligibility: The statement mentions that results may vary, and not all payments are boost-eligible. This underscores the fact that the impact on credit scores, referred to as "Experian Boost®," may not be universal for all users, and eligibility criteria likely exist.
Credit Score Information: The credit score is calculated based on the FICO® Score 8 model. It's highlighted that lenders or insurers may use different FICO® Scores or other credit scoring models. This is a key reminder that the credit score provided may not be the exact score used by all financial institutions.
Editorial Policy: The information provided in Ask Experian is explicitly stated to be for educational purposes only and not legal advice. Users are encouraged to consult their attorneys or legal professionals for specific legal issues, reinforcing the importance of seeking professional advice.
Disclosure and Editorial Independence: The article emphasizes that Experian's policies change over time, and archived posts may not reflect current policies. It assures readers that opinions expressed are those of the author alone and not endorsed by any financial entity. This reinforces the editorial independence of the content.
Advertiser Disclosure: The disclosure mentions that compensation is received from third-party companies (partners), and this compensation may impact how products are presented on the site. This indicates transparency in disclosing potential conflicts of interest.
Offer Terms and Conditions: The disclaimer advises users to review the full legal terms and conditions on the issuer or partner's website before applying for any financial offer. This serves as a reminder to consumers to understand the complete terms associated with any financial product.

In conclusion, the information provided is comprehensive and exhibits a commitment to transparency and user education, aligning with industry best practices. It is a reminder for consumers to exercise due diligence and fully understand the terms and conditions before engaging with financial products and services.

FAQs

Why Did My Score Go Down When I Stopped Using My Credit Card? ›

Similarly, if you pay off a credit card debt and close the account entirely, your scores could drop. This is because your total available credit is lowered when you close a line of credit, which could result in a higher credit utilization ratio.

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Does credit score drop if you stop using credit card? ›

The other risk of leaving a card inactive is the issuer might decide to close the account. If you haven't used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip.

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Why did my credit score go down after paying off my credit card? ›

Credit utilization — the portion of your credit limits that you are currently using — is a significant factor in credit scores. It is one reason your credit score could drop a little after you pay off debt, particularly if you close the account.

Why has my credit score gone down after taking out a credit card? ›

New accounts

Whether or not you're accepted, 'hard' credit searches could affect your credit score, especially if you make a number of full credit applications in a short period of time. When you're approved for new credit, the average age of your accounts will drop, which might also reduce your credit score.

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Why has my credit score gone down for not using available credit? ›

Credit reference agencies monitor the amount of credit available to you, and how much you've used – this is known as the 'credit utilisation ratio'. As this gap narrows, your credit score could go down.

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Is it better to cancel unused credit cards or keep them? ›

But closing an unused credit card account isn't always the best move. In fact, unless the credit card comes with an annual fee, most experts will tell you to just leave the account open.

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How do I get rid of a credit card without hurting my credit? ›

A credit card can be canceled without harming your credit score⁠. To avoid damage to your credit score, paying down credit card balances first (not just the one you're canceling) is key. Closing a charge card won't affect your credit history (history is a factor in your overall credit score).

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Why did my credit score go down when I pay everything on time? ›

Using more of your credit card balance than usual — even if you pay on time — can reduce your score until a new, lower balance is reported the following month. Closed accounts and lower credit limits can also result in lower scores even if your payment behavior has not changed.

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How to get 800 credit score? ›

Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.

How can I raise my credit score 200 points in 30 days? ›

Try paying debts and maintaining your credit utilisation ratio of 30% or below. There are two ways through which you can pay off your debts, which are as follows: Start paying off older accounts from lowest to highest outstanding balances. Start paying off based on the highest to lowest rate of interest.

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Should I pay off my credit card in full or leave a small balance? ›

It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

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Should I close my credit card after paying it off? ›

Keep your cards open, if it makes sense

But closing a credit card could hurt you in terms of your credit scores. That's because one of the largest factors in your credit scores is your credit utilization ratio, or how much credit you're using compared with how much you have available. The lower that ratio, the better.

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What drops your credit score the most? ›

5 Things That May Hurt Your Credit Scores

Making a late payment.
Having a high debt to credit utilization ratio.
Applying for a lot of credit at once.
Closing a credit card account.
Stopping your credit-related activities for an extended period.

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Should you keep credit cards at zero balance? ›

Keeping a zero balance is a sign that you're being responsible with the credit extended to you. As long as you keep utilization low and continue on-time payments with a zero balance, there's a good chance you'll see your credit score rise, as well.

What credit score is needed to buy a house? ›

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

Is it bad to let a credit card close due to inactivity? ›

How does this affect my credit history? A credit card canceled for inactivity may impact you in the following ways: The cancellation may affect your debt to credit utilization ratio, which is the amount of credit you're using as compared to the amount of credit available to you.

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