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Paid off mortgage - score went down

Valued Member

Paid off mortgage - score went down

I sold my house and expected my score to go up since my overall debt went down SIGNIFICANTLY due to the mortgage being paid off.  Instead, my score went down by 32 points.  What could cause that?  Any insight would be helpful. 

Entered the Garden 01-01-15
Starting Score: 626
Current Score (12/14): 691
Short Term Goal Score: 750

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9 REPLIES
Senior Contributor

Re: Paid off mortgage - score went down

One of the FICO scoring factors is mix of credit types.  If you no longer have a mortage reporting, it may negatively effect your score.  And because installment utilization has almost no effect, you don't really see a benefit from lowering your utilization on your mortgage loan.

 

My apologies for the misinformation, didn't realize paid off loan still counted for mix of credit.  Thanks to mods for clarification.


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


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Valued Member

Re: Paid off mortgage - score went down

Thanks for your comments.  I would not have ever imagined that reducing debt of any kind would have a negative impact on scores.  I appreciate the education.  

Entered the Garden 01-01-15
Starting Score: 626
Current Score (12/14): 691
Short Term Goal Score: 750

Take the myFICO Fitness Challenge
Senior Contributor

Re: Paid off mortgage - score went down

Yep, there are a couple strange quirks to how this scoring works.  But score isn't everything.  Congrats on paying off your mortgage.


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


Take the FICO Fitness Challenge
Super Contributor

Re: Paid off mortgage - score went down


eft2013 wrote:

I sold my house and expected my score to go up since my overall debt went down SIGNIFICANTLY due to the mortgage being paid off.  Instead, my score went down by 32 points.  What could cause that?  Any insight would be helpful. 


Can I ask where you obtained your scores ?  FICO scores rarely increase or decrease significantly from paying off installment loans.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Valued Member

Re: Paid off mortgage - score went down

Hi pizzadude.  I pull my scores from this site. 

Entered the Garden 01-01-15
Starting Score: 626
Current Score (12/14): 691
Short Term Goal Score: 750

Take the myFICO Fitness Challenge
Moderator Emeritus

Re: Paid off mortgage - score went down

Yea, I vote that something else happened aside from the mortgage. Your mortgage is still factored into your mix of credit even after paying it off, so that's not an issue. If anything, you stand to see a small gain if you have multiple accounts with balances. By chance do you have all $0 balances showing now? 

 

While your after-FICO was from here, was the before-FICO for comparison from the same source?

 

If pulled from here both times, then put both FICo reports together. Look for any differences. I'd start with the Credit At-A-Glance page. Make sure the numbers are exactly the same (aside from the mortgage). Any differences, even added red flags, can throw your scores off by quite a bit. Also look at your Acounts page. Compare both and look to make sure all of the same accounts are there. If any dropped or were added, then your score can change by as much as it did. Look also at the balances. If your CC balances increased then that can be a cause too. Also look for any red flags that weren't there before. Finally if all of the info matched, then look into each account to see if there were any changes or if any bad account changed, if any.

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Regular Contributor

Re: Paid off mortgage - score went down


eft2013 wrote:

I sold my house and expected my score to go up since my overall debt went down SIGNIFICANTLY due to the mortgage being paid off.  Instead, my score went down by 32 points.  What could cause that?  Any insight would be helpful. 


When I refinanced my mortgage last summer, my EQ score dropped 11 points when the old mortgage was reported as closed (I have SW). All other things on my CR were unchanged so it was only the mortgage that impacted the score.  When the new mortgage started reporting a couple months later I had a 10 point increase - again everything else was constant. Still not sure why that happened.

FICO: EQ 769, TU 762 , EX ???

Valued Member

Re: Paid off mortgage - score went down

Thanks for all the comments.  I'll do another thorough comparison to see if there were other factors that influenced the score to go down.  I think the best think I can do to raise my score is to aggressively pay down cc balances and see if I get late payments removed.

Entered the Garden 01-01-15
Starting Score: 626
Current Score (12/14): 691
Short Term Goal Score: 750

Take the myFICO Fitness Challenge
Regular Contributor

Re: Paid off mortgage - score went down

That's a big drop. Is it possible that you landed in a new bucket? I have no idea what the variables are when it comes to rebucketing, but just maybe one of those variables involves having a current (open) mortgage?  Anyone know if that has any relation to bucketing?