Why does qbo automatically select all credits when you are making a vendor payment or do I have something set up wrong

Because in company settings>automation you have it check marked to automatically apply credits. I prefer to leave that unchecked so I control what credits get applied when

It's nice to have you here on the Community page, @kris24.

In addition to Rustler's answer, QuickBooks automatically identifies the existing credits of your vendor that matches the amount of your bill, if you make the payment from the Bill page.

On the other hand, if you'll be paying the bill from the Pay bill tab, you can select how much credits you want to apply for that specific bill.

For additional reference about vendor credits, read these articles:

• Enter a credit from a vendor 
• Applying vendor credits 

Leave a comment below if you have any other questions. I'm a few clicks away to help. Have a good day!