Help me understand what is happening, please.

[lizabeth_davis]

So a few years ago I had to rebuild my credit, I was able to get it to 768. This is my FICO score I saw this score for months on my discover statement. Today I open up my statement and it has dropped to 742. I have not had any late payments or opened any new lines of credit. The only thing that has happened is that I paid off my auto loan, it was the only type of installment credit I had on my report. I don't understand how paying an auto loan on time every month and then paying it off six months early would cause such a dip in my credit score. I even had my 2 credit cards increase my limits multiple times where my debt/credit ratio is well lower than 30%. Will my credit ever recover? Will I have to get another car just to have another loan on my CR? I don't understand I'm really freaking out because I was going to start looking for a house to buy in the next year and with a 768 I would have gotten good rates on a mortgage but now I'm barely in the "good" range. The only negative thing I have on my CR is one 30 day late mark back in 2009. Is this just a minor blip will it bouce back?? Will it take another year to recover? Please help it took me two years to get to a 768 (I know it's not great but still) and I don't know why it would go down by 20+ points in 2 months.

[user5387]

It's possible that moving an installment loan from "open" to "closed" will drop your scores a few points.  I've included a couple of links at the bottom, that touch on this.

There are other possibilities.  One of them is the utilization reflected in your reported CC balances month to month.

Can you think of anything else at all that has changed in your setup over the last few months?

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Score-impact-on-open-vs-closed-installmen...

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Open-installment-loans-vs-benefit-of-clos...

[lizabeth_davis]

My CU on my store card is 420 out of 2620.00 which is about 16% and my other card is 125 out of 4750.00 which is less than 3%. I have not charged anything new on the store card for about a year (I went a little crazy with it) and the other card I charged a few christmas presents to (for cash back). I have not applied for new credit in over a year. I have 1 hard checks on my credit for the past 2 years.  My store card has been open for 10 years and my new card has been open for over a year. Last and only late payment I have on my report is 2009. When I checked my FICO TU score they stated that it was missed payment and lack of recent installment loan information. I know that the one missed payment will stay on my report for seven years, but really one missed payment in 10 years of credit use. I don't understand I mean the links you provided people were complaining about 10 point reductions but mine is double that.  Maybe I should check all my reports for some sort of fraudulent activity.

[user5387]

Another approach to this situation is to optimize what you can, with or without an installment loan.  Here are a couple of suggestions.

1.  If there's some way to remove the derogatory, for example by writing a goodwill letter, then I'd pursue it.

2.  For utilization, there are at least three basic factors: (a) overall utilization, (b) utilization per card, and (c) proportion of cards with balances.  There are many threads on this forum that basically say that you should let one card report a small balance, with the others at $0.  For example, if you pay off the store card, and let the other report $125, you'd be pretty close to optimum.

3.  It's always possible that your reports have erroneous information on them, and it certainly pays to check.  You can get free printed reports once a year, or pay for them more frequently.

[lizabeth_davis]

Thanks for your help. I did pull up my report and something fishy is on it. I've submitted a dispute on the matter. I do appreciate your helpful information!