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We recently received the following question from a reader about why her credit score would drop after paying off a credit card balance:

A month or so ago I got my credit score. It was 812. Today I received an email saying there was an update to my score so I logged in to see the change. My score is now 800. The only thing different is I paid off one of my credit card balances. Should I keep a balance? This doesn’t make sense why it would go down. Nothing else has changed.

As lenders report updates to the credit reporting agencies and your credit report changes, it’s not uncommon for credit scores to fluctuate a few points from month to month. And for high scorers like yourself, a fluctuation of 12 points is very minor. However, to answer your question — paying off a credit card balance wouldn’t lower your credit score unless you closed the credit card when you paid it off. In fact, paying off (or paying down) a credit card balance would have the opposite effect.

There are a number of reasons why a credit score would drop: a negative item that wasn’t reported in the past, higher balances on credit cards, new account openings, new inquiries — or a combination of these things. It’s easy to speculate what may have caused a score drop but in the end, the only way to truly know what caused a score to drop is to compare the credit reports used to generate the score for each.

I know you mention that nothing else changed but if your score dropped, something in your credit report changed. The free monthly updates from Credit.com’s Credit Report Card only include changes in your score so unless you ordered a full credit report, it’s impossible to know what caused the 12-point drop. (You can get your credit reports for free once each year from each of the three credit reporting agencies.) Having said this, there are a few other factors at work here that I think may ease your mind and explain the slight drop.

Paying a credit card balance in full doesn’t necessarily mean your credit score will reflect your most recent credit card payment. This is because credit card issuers generally report updates to the credit reporting agencies once every 30 days, typically around the time that your monthly statement drops. For this reason, the balance reported in your credit report would show the balance from your most recent credit card statement. And if your most recent statement balance was higher than the previous month’s statement balance (when your score was 812), it would cause your score to drop. So you’d have to stop using your credit card for at least a month before the balance would be updated and reflect a $0 balance in your credit reports.

In the grand scheme of things, a slight fluctuation isn’t something to be overly concerned with — especially with scores as high as yours. Scores in the 800+ range are golden in the financial world and will get you the best deals that lenders have to offer, which, after all, is one of the best reasons for maintaining great credit.

For more about credit reports, credit card management and improving your credit scores, check out these great resources:

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  • Boogie Ondown

    Experian score: 740
    Pay off car loan: 700
    No debt for a year, no past judgments or bankruptcies, no late payments, under 3% credit usage, no new loans: 716 and won’t budge.

    All other scores 780+

    I don’t get it. I would think a 730 would eventually appear, but nope I guess being in debt with a car loan, despite making years of payments on car loans (15+) means nothing. I’m not sure why I would be showing as a person not to loan to as much as a person with a car loan. I’ve proven I’ve made long term payments in the past, but not having any current ones seems to be bad news to Experian.

  • Oneangrysoldier

    I had built my credit up using a credit card from my bank after my exwife ruined my credit while I was in combat. I paid the balance of my credit card and my score dropped 65 points. This is devastating as I’m looking at buying homes.

  • Bob

    I recently bought a new home. During the loan process, I paid off two credit card balances.After closing, I happened to re-check my credit score. Prior to starting the process of buying the new house my credit score was 827. After closing, it dropped to 680. Nothing else ha happened and I haven’t a clue why this would happen? I have no revolving credit and 2 credit cards (Amex, paid to zero monthly, and Discover, which I sometimes carry a balance)

    • http://www.credit.com/ Credit.com Credit Experts

      We don’t know either. But a large, unexplained drop can possibly point to fraud or identity theft. It may be wise to check your free annual credit reports to be sure no new accounts have been opened without your knowledge or consent.

  • A.Turner

    Question Gerri, the only thing I have on my credit report is my truck loan and a credit card which I opened about 3 months ago to help build credit. My truck loan was at a utilization of 10% and nothing changed when I got the credit card. I have made 3 on time monthly payments on my credit card keeping it at 10% usage and my score did not change. 2 months ago I paid more on my credit card and it dropped below 10% usage and my score dropped 3 points from a 669 to a 663, last month my truck payment took me under 10% usage and I lost another 3 points I’m at a 660. Why did this happen? As I stated earlier all I have on my credit is my truck loan and this credit card, I use equifax to pull my score daily, I have a monthly subscription with them.

    • http://www.credit.com/ Credit.com Credit Experts

      How are you figuring utilization on a truck loan? Usually those are installment loans (with equal payments for the life of loan). Utilization is the amount of credit you are using relative to your credit limit. Have you pulled your free annual credit reports to be sure the information there is correct? That’s a good place to start. The best thing you can do is pay on time, because payment history has the biggest effect on your scores. Second is keeping balances low. (Using less than 10% of your available credit and paying it off in full and on time each month is ideal.) Here’s more:
      How Long Does It Really Take to Improve Your Credit?
      How to Rebuild Credit

      • A.Turner

        My report gives me my utilization each month, everything is accurate and on time. No late payments at all. No I don’t do the free report because I have an account with equifax. I get free reports through them daily.

        • http://www.credit.com/ Credit.com Credit Experts

          Are you talking about credit scores or credit reports? You seem to be using the terms interchangeably. Utilization would not include your truck loan, unless you bought it with revolving credit.

          • A.Turner

            My report gives me my utilization. My truck payment is being reported as an installment but it also has a utilization percentage attached to it which is decreasing as I pay it off.

      • A.Turner

        My utilization is given to me on my report. I have no late payments at all. I don’t use the free reports since I have an account with equifax that gives me free reports daily.

  • chris p

    I had a similar situation. On 9/8/15 my FICO score was 671. I paid off a $45 balance on my CC on 9/17/15 (the limit on this card is $2500). I contacted my CC agency and they stated that they report monthy on the 1st of each month. When I check my score on 10/7/15, I see it is 648, a drop of 23 points !!!
    How is this possible???? I pay my $180 monthly car payments on time, which now hold a $733 balance of what was a $6,125 loan. I have had no inquires in the last 10 months. I do not use my credit card at all. the $733 on the car loan is the only debt i have.


    • Jeanine Skowronski

      Hi, Chris,

      It is possible for a credit card balance to appear on a credit report even if you paid in full because issuers report balances as of the statement’s billing date, not closing date.

      Having said that, if you are not using your credit cards regularly, you may want to pull your credit reports and check for errors. There may be one that is pulling the score down.

      Thank you,


  • http://www.paranormalnewengland.com Michael Baker

    I have to agree with many of the responses here. I carried zero balances each month on all my credit cards for a while. But one month near a statement close I had an emergency and a $300 balance got reported. As I expected my credit score dropped about 10 points because my utilization increased. I thought it would atleast return to near normal the next month when the zero balance returned, but I was wrong. My Fico reported that my balance had changed to zero and I lost 10 more points! I was devisated. My score should not have dropped. I checked other score sources (credit karma, capital one etc) and the score went up as expected, but my fico dropped. Something seemed wrong. I happened to have every monthly credit report from My Fico for the last 6 months. I looked at every detail and confirmed that the ONLY change was the paid off credit card balance. Clearly I got shafted by My Fico. It sucks that My Fico is the most used. It is incorrect and no matter how many times I brought this to thier attention they simply dont care and will do nothing about it. They wont even investigate. Some quality control.

  • http://www.Credit.com/ Gerri Detweiler

    I wish I had a simple answer for you. It could be a combination of factors or it could be primarily that one…and keep in mind other scoring models will look at your mix of credit differently. I know it’s discouraging. Do you have other open active accounts of any type reporting?

  • http://www.Credit.com/ Gerri Detweiler

    I know this is confusing but the fact that these things changed and your credit scores dropped does not mean they were the cause of that change. I wrote about that more in this more recent article: Help! I Paid Off My Credit Card & My Credit Score Dropped

  • http://www.Credit.com/ Gerri Detweiler

    Jennifer – I wrote a more recent story on that topic here: Help! I Paid Off My Credit Card & My Credit Score Dropped. What can be done about it depends on a number of things — which scoring model is being used, and whether you have other current credit references reporting. What service did you use to check your scores?

    • Jennifer Ryan Tharp

      Thanks for the reply! It wasn’t a credit card it was an installment loan. I use the myfico service.

      • http://www.Credit.com/ Gerri Detweiler

        Do you have any other open installment loans?

        • Jennifer Ryan Tharp

          No this was the only one. I actually got a motivation and it shows what’s hurting my score is that I don’t currently have any recent activity from an installment loan.

          • http://www.Credit.com/ Gerri Detweiler

            My best guess (without knowing everything in your reports) is that’s at least part of the problem.

  • ray

    I am in the process of getting a mortgage. I was within 3 points of the score I need for the loan. I paid off one CC to $0 from a balance of $70. That was the only change in my report from two days prior. My score dropped 19 points.

    It is ridiculous for the credit people to say paying down a CC to $0 won’t make a significant drop in a score. And, if you think 19 points is small compared to the range, that is also a ridiculous assertion. Compare the mortgage rates and down payment requirement for credit scores of 681 and 700.

  • VSP

    Don’t understand… May credit score has dropped 7 points with Equifax, 4 points with Transunion and went up 4 point with Experian.. Why can’t the all get the information straight across the board? I’ve been cleaning up my credit and i check it every week. Keeping my credit balances at 34% and never being late with any charges. So doesn’t my score reflect the correct history?

    • http://www.credit.com/ Credit.com Credit Experts

      VSP —
      It can be confusing. The credit bureaus do not share information, and not all creditors report to every bureau. Have you checked your free annual credit reports from AnnualCreditReport.com? Any inaccuracies there could be reflected in your score. Also, a credit utilization of 34% could be hurting your scores. Credit utilization is figured both individually (for each card) and cumulatively (your balances, added together, versus your total credit limit). Most experts suggest keeping it under 30%; under 10% is even better. You can read more here:
      Why Do I Have So Many Credit Scores?
      3 Reasons Why Your Free Credit Score Looks Wrong
      How to Decode Your Credit Score

      • VSP

        Thank you…I get my credit report every month. No past due payments, just paid off my last two doctors bills ( collections). Now, I do use my cards for the cashback and/or points but this never brought down my scores before and I generally make multiple payments. Just purchased a new car with a deferred payment however, I’ve been making interest payments. But I will be mindful to keep both combined credit cards balanced to below 10 to 30%.

        • http://www.Credit.com/ Gerri Detweiler

          I know it’s frustrating @VSP, but keep in mind a 4 point change in a store that ranges from 300 – 850 is less than a 1% change in the score. I know it feels like it’s going in the wrong direction but it’s not really statistically significant. Hang in there and keep the utilization low if you can!

  • Terri

    I had an experian socre of 674, and a balance on my my $300 limit credit card of $161. Well I paid above the minimum balance which took my balance to $86. My experian score dropped to 666, and myfico said it dropped becasue my usage percent went from 53% to 29%. Why would this drop my score I thought it was good to may above the minimum balance.

    • http://www.Credit.com/ Gerri Detweiler

      Reducing your utilization is likely good for your scores overall. It’s so hard to pin down a score change to one specific thing – there are so many variables involved. Sometimes the messages you see about your score aren’t necessarily causal – I wrote about that in this article:
      Help! I Paid Off My Credit Card & My Credit Score Dropped

  • Peter

    What has happened with me once was: I paid my credit card off but, as a direct result of doing so, I went into my overdraft with my regular bank, on my current account. I generally do use the overdraft and it has never been a problem, but because I had recently increased my credit limit, I went even more in to my overdraft. This caused the credit card company to send me an email saying that there had been a change to my history. When I logged in to their website, it said, “There has been a significant balance increase in one of your accounts”. I was puzzled for a couple of hours – “Why? I have just paid off my credit card!” The answer laid on the balance of my debit card, for I had paid my credit card with my overdraft. Dumb, dumb thing to do! But, yeah… always look at all your cards and credit scores are a combination of several, several things.

  • Barbara

    Thank you for this article. I’m concerned because I just got notification feom Barclay of a change in my FICO score – from 806 to 789 with the explanation that I had “too many open accounts with balances.” Now, the only open credit accounts I have with balances are a 12 year old mortgage and a 2.5 year old car loan, both of which are always paid on time. I had just paid off my Barclay balance (never late there either) a couple of months ago, and I opened a savings account with my bank. Other than a unused credit card, standard checking (never overdrawn) and a HSA I have no other financial accounts. Should this be a flag for me to investigate whether there has been identity theft?

    • http://www.Credit.com/ Gerri Detweiler

      It’s hard to say, though certainly if you haven’t already ordered all three of your free annual credit reports it would make sense to get at least one of them to see if there is something you don’t recognize listed. A 17 point drop on a score is high as yours isn’t is bad as you may think and it’s hard to say exactly why it did. The reason codes that are listed can sometimes be challenging to understand, especially when you have very strong credit and there’s nothing that stands out in terms of problem areas. So I certainly wouldn’t panic if I were you but it also wouldn’t be a bad idea to go ahead and review one of your reports.

      This article may be of interest: How to Decode Your Credit Score

      • Barbara

        Thank you!

  • http://www.Credit.com/ Gerri Detweiler

    Liz and Courtney – I’d be interested in hearing specifically which credit scoring service you are using to monitor your scores (the name of the credit bureau and the name of the scoring model). Would like to look into this further .

    • Courtney Gant

      Hi Gerri!

      I’m currently using myfico.com to monitor my credit. Both Experian and Equifax decreased my score.


      • http://www.Credit.com/ Gerri Detweiler

        Thanks Courtney – emailing you.

        • Kim M

          Hi Gerri. I’m in the same boat as Courtney and Liz. I’ve been working to bring up my credit score, in part by paying down debt with a goal of paying it off entirely. My Experian score just dropped 20 points in one day (yesterday, I paid off a balance on a card…experian is the only place that reflects that $0 debt number, and it’s the score that dropped) I’m using Experian to monitor, and it tracks all three FICO scores. Disappointing to see that I’m being penalized for paying off all debt.

          • http://www.Credit.com/ Gerri Detweiler

            Hi Kim – I am working on an article on this. I will reach out to you by email.

  • Courtney Gant

    It happened to me also!! I agree with you…A TOTAL SCAM!!

  • Liz

    I have twice paid thousands of dollars at one time to pay off my cards, This time I paid 30K. Both times I did that, my credit rating dropped over 40 points, This time was the same. I paid off the debt to start looking for a house. Now that dream is dead as well as my bank account. So angry.

  • Nasafiyel Paige

    I’m in the same boat here. My Experian score dropped from 710 to 690 within a week. I called the F*CO folks for an explanation as I knew NOTHING changed but a balance decrease from $90.00 to $0.00. The gentleman told me the only possible thing he could think of was having a 1% balance being reported was better than 0%. I told him there was NO WAY in Gods green earth hat would cause a 20 point drop. No way!!

  • http://www.Credit.com/ Gerri Detweiler

    @Mike – Ah I see. What was your score before or after the drop?

  • http://www.Credit.com/ Gerri Detweiler


    I completely understand your frustration and am not in any way trying to diminish that, but I would caution you to be careful about drawing specific conclusions from a single event like this. I don’t know what your scores are, but assuming they are already strong, a 17 point drop may not mean that much in the scheme of things. I know it feels like a lot, but 17 points is only about 2.5% of 650 – the range of points in most FICO scores. And there are so many factors that go into the score, not to mention the various scorecards within a scoring model, that it can be hard to pinpoint the specific cause of a relatively small drop — especially if it’s not due to new negative information. I’d encourage you to hang in there for a month and see what happens next month.

    • john smith

      if you are tryingto get a mortgage and your score in under 700 youare screwed . i had 4 chargeoffed totaling 14k i used my bonus money to py them off and my score now dropped 75 points. toal b/s

    • Ed209

      Gerri, I have been using myFICO for months to get scores from TransUnion, Experian and Equifax. My scores are all 800+. I hold zero balances on all my credit cards. I have seen, without fail, every month that when I put a balance on any card, my credit scores go up by about 14 points or so. When I pay the balance off, my scores go down by about the same. Every month. This is not an isolated incident. I am going to experiment and leave a small balance on a card. I predict my scores will go up and stay up as long as I have a non-zero balance.

      I also was told by a bank representative in so many words that they were not happy with me not using my credit card and wanted me to start purchasing with it. Obviously they want transaction fees. The implication was that if the card stayed dormant, something would happen, but exactly what, I don’t know. Possibly a credit line decrease or account closure.

      The point is that what you and others say about increasing credit scores by reducing the balances only seems to work up to a point, and that point is somewhere above zero. One could experiment by increasing the balances slightly each month until the credit score started going downward, and figure out the “sweet spot” from that. I think I’ll try that.

      Until then, I would say that people should consider keeping a small balance on a card or two and paying only the minimum payment, and see if that improves their scores.

      • http://www.Credit.com/ Gerri Detweiler

        Interesting. The question I have is what balance does your issuer report? The balance after the statement closing date (and before your payment is due ) or the balance after your payment is made? I checked my reports and all my card issuers (five of them — all major issuers() report as of the statement closing date. That would mean that whether or not I actually carry a balance is irrelevant since the reporting cycles doesn’t pick up my balance after my payment is made.

        I’d definitely be interested in whether you have checked that and what you have found. (Also see our more recent article on this topic: Help! I Paid Off My Credit Card & My Credit Score Dropped)

  • Mel

    I recently sold my home and paid off my mortgage loan in May of 2014. I also paid another loan in full in July of 2014. My credit score was 760 before May 2014 and now has dropped to 689. Who can I write to appeal this?

    • http://www.Credit.com/ Gerri Detweiler

      Paying off a mortgage shouldn’t typically cause a large drop in your credit scores. Are you monitoring your scores through the same service each time? What reasons are being given for your current scores? Do you have other open, active credit accounts?

  • http://www.credit.com/ Credit.com Credit Experts

    Rob —
    So many things affect your credit score, and small changes are normal. (Often utilities are not even reported to credit bureaus, except if they end up in collections.) The best thing you can do is to pay your bills on time. We would suggest getting a secured credit card. In that case, you put down a balance equal to what will be your credit limit. Then, you’ll want to both use the card and keep your balance below 30% (below 10% is even better). If, say, you get a secured card with a $250 deposit, you’ll want to keep balances below $75. Paying the card off in full and on time should help. These resources may also help:
    How to Rebuild Credit
    How Secured Cards Help Build Credit

  • http://www.Credit.com/ Gerri Detweiler

    That doesn’t necessarily mean that’s why the score dropped. There are so many factors that go into the score that may seem like the explanation though it could be something else.

    • Kelly

      Sorry Gerri, But, I had a low balance on my only credit card. $500 limit with a $150 balance. When I was paying $50 towards a $25 minimum payment my score increased 5 points. When I paid it off my score dropped 18 points. I am recovering from a bankruptcy for a bad business venture. Before the bankruptcy I was in the high 7’s low 8’s. When this happened my score was 637. It went up 5 to 642 when I was paying double minimum payments and when I paid off the small balance it dropped to 627, 18 points. It told me “Your credit report shows no recent balances on your revolving account. Your FICO Score was hurt because you are not currently demonstrating active revolving credit management.” The only credit I have I a mortgage and this CC. I get may full report each month and nothing else has changed, nothing added, nothing removed, only a zero balance.

      • http://www.Credit.com/ Gerri Detweiler

        Emailing you

  • http://www.Credit.com/ Gerri Detweiler

    Casey – it depends on what factors are hurting your score right now. If you get your free credit score from Credit.com you will also get an action plan for your credit and a breakdown of the factors affecting your scores.

  • http://www.credit.com/ Credit.com Credit Experts

    Scores fluctuate — often changing daily or more often. Small point changes, like the one you describe, shouldn’t be anything to worry about. We wrote about it here: Making Sense of Your Credit Score. It sounds as if you are checking your scores regularly — that’s a good habit to be in, but there’s no reason to worry about small fluctuations. Here’s how to monitor your credit score for free.

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  • Katydid

    Does it help our credit score to pay off our credit card balance before the statement drops, or should we wait until the statement drops to pay off the balance? We have no other debt, and we are using the card just to have an active credit score in order to purchase a house later.

    • http://www.credit.com/ Credit.com Credit Experts

      Katydid – The goal is to keep the balance as low as possible so that your revolving utilization percentage is low (which is good for your credit scores). Having said this, the balance reported in your credit reports is typically the balance that’s listed on your monthly statement. (Creditors typically report once a month, usually around the time your monthly statement drops.) If you want the balance to be reported as “zero”, you’d pay the balance just before the credit card issuer sends their update to the credit reporting agencies. If this is a big concern, and you want to know for sure, you may wish to contact the credit card issuer to find out when they report your monthly updates to the bureau so that you can time your monthly payments accordingly.

      If your balances are low (10% or less of the credit limit), I wouldn’t really worry about this too much. As long as the reported balance is under 10%, you’ll do very well in this category of the score calculation. For more on revolving utilization, how it’s calculated and what credit score models are looking for, the following resources should help:

      The Ultimate Guide to Credit Scores
      5 Things That Make Up Your Credit Score
      How to Calculate Your Credit Card Utilization (I Have Too Many Credit Cards, What Do I Do?

    • les s

      The same thing happened to me. I paid off a higher balance from credit card and my score went down 7 points. WTF…. I thought, I did the right thing paying off large balance, dropping my utilization. I charged something like 10 $ purposely, so I would have more than 0% utilization and the score still went down. I thought, I was being wise playing the credit system rules. I got so mad after that. I just paid my credit card off. I am going to sit on it a month and not use it. It’s going to either drop again or increase. Either way, I am pissed. I followed the rules.

  • http://www.credit.com/ Credit.com Credit Experts

    If you can keep the accounts open, the zero balances will def. help your revolving utilization. It’s also a good idea to use the cards for small purchases every now and then (and then pay the balance in full) just to keep the cards active so that your issuer doesn’t close them due to inactivity. If you want to close the cards, how it will impact your credit scores will really depend on several factors but the largest variable is how it will impact your revolving utilization. For a more detailed look at whether or not it’s a good idea to keep a credit card account open with a zero balance, the following article will help: I Have Too Many Credit Cards. What Do I Do?

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