For six months, one person did exactly what personal finance advice tells struggling people to do. They worked extra shifts. Sold belongings. Skipped meals. Every spare dollar went toward wiping out a $3,000 credit card balance. When the balance finally hit zero, they felt proud.
That feeling lasted for only one evening.
When they checked their credit score the next morning, it had dropped 28 points. After months of sacrifice, their reward was a worse score and fewer options. The post, shared in r/povertyfinance, exposed a quiet truth many people learn the hard way: the credit system does not reward effort equally.
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The score drop wasn’t because the debt was paid off. It happened because the card was closed. It was their only credit card, and it carried a $95 annual fee they could no longer afford. Closing it wiped out their entire available credit line and shortened their credit history in one move. “If you only have one card and you pay it off completely the system punishes you,” one person deducted.
From a scoring standpoint, that matters. From a survival standpoint, paying off the debt mattered more.
“I did everything ‘right,’” the original poster wrote. “I paid off my debt. I made sacrifices. I didn’t go out. I didn’t buy myself anything. And my reward is a worse credit score and still no path forward.”
Many commenters pointed out that the score drop was temporary and likely to rebound. Others stressed that paying off the card still saved interest and lowered monthly pressure. One top reply said that if the debt hadn’t been paid, they would be $3,800 underwater instead of $800.
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“The advice is written for people who have multiple credit cards who have family that can co-sign, who have enough income to strategically manage their credit utilization,” the OP wrote. “That’s not me. That’s not most of us here.”
They listed the familiar rules that break down under pressure. For example, the advice to keep your credit utilization under 30% becomes impossible when a $1,000 limit is the only buffer between rent and eviction.
Never close old credit cards sounds different when the annual fee competes with groceries.
The advice to have six months of emergency savings feels absurd when $600 took two years to build.
The system rewards people who can keep accounts open indefinitely, carry multiple lines of credit, and absorb temporary swings. Those conditions are much easier to meet when income is higher and mistakes are less costly.
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Some commenters argued that credit scores are overrated unless someone is actively applying for a loan. Others pushed back hard.
“For poor people credit scores matter more,” one person wrote. “Because bad scores make everything more expensive.”
Low scores can mean higher deposits for apartments, worse car loan terms, fewer rental options, and even job barriers in some industries. In that context, a 28-point drop doesn’t feel academic. It feels like another door closing.
One takeaway from the thread is that blanket advice fails people at the margins. Knowing when to keep a card open, downgrade instead of closing, or rebuild credit strategically can make a difference. But that kind of nuance rarely fits into viral money tips.
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“If you’re in the same boat you’re not alone and you’re not stupid,” the OP wrote. “The game is rigged. We’re just trying to survive it.”
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This article ‘The System Punishes You ‘— Why Completely Paying Off Your Only Credit Card And Doing ‘Everything’ Right Isn’t Always The Smartest Financial Move originally appeared on Benzinga.com
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