Question

Why is it that paying off all your credit debt can reflect badly?

When you pay off your credit card debt in full why does that reflect badly on your credit score?

Wouldn't it be a good thing to pay off all credit card debt and raise your credit score instead of the credit score going down and being bad?

Answer 1

Paying off all your credit card debt should not harm your credit score at least not by much.

When you pay off your credit cards it shows you're a good risk but if you keep the credit cards open and continue to pay monthly payments on the credit cards then it builds a much better credit history.

And the longer you have the credit cards open and continue to make those payments the longer and better credit history you'll have to show to other loan companies or any other lender that you plan to take out loans with.

So paying off your credit card debt in full is okay and should only affect your credit score slightly for a little bit but keeping credit cards open can build a better credit history and improve your credit score more overtime.