110 point drop OMG!!! what the hack??

[Anonymous]

The more Im dealing with credit the more i get confuse and I will never understand the credit system work.

I've been rebuilding my credit since July 2014 with a 515 score......Untill recently my score went up to 760 which is very good job i am proud of myself.

Now I was at the begining stage of getting mortage and talk to a few LO....They have recommend me to paid off and down our debt since we (wife and I) have high income to ratio which I do agreed with the LO and it make since.

Since we have cash to paid off our loan and down some of our debt so we went ahead and do it.

Last 2 weeks I have paid...

PAID OFF 2 personal loan about 5k total (me)

PAID OFF 1 auto loan 8K total (me)

ReFinance our auto loan and paid 10K down toward payment. From 675$ payment to 385$ payment.  Close exiting loan and reopen new loan after refinance.

With these 4 personal loan and auto loan been paid off and refinance my score drop from 760 to 650 WOW!!!

Now  this is from Equifax site only..I'm not sure about my fico score yet since I didnt get any update.  My Experian drop 4 point which I understand and expected, my transunion heavent move yet.

Will all these activity will drop my fico score down a lot? will I be qualify for mortage? 

[tallchick]

Where are you getting your score from? Are your scores your FICO scores or your Mortage scores from here or????  Yes, believe it or not your score can drop when you pay off a loan, just know it's temporary drop and it will recover in a few months. The good news is you now have a positive tradeline that will stay on your report for the next 10 years.  There is no magic wand that says "do this and this will happen", the models used are many and the versions are endless; since everyone's credit situation is different different actions will result in different scores.  If you can post more info we can perhaps give  better feedback, but for now just understand that Your drop is temporary and it will bounce back.  Also be sure to double check that no negatives have been added to any of your reports, that will cause a score drop significantly.  Congratulations on paying off debt and starting your path to homeownership, it is a marathon, not a sprint have patience and keep up the good work, don't be discouraged by "numbers" focus on keeping  obligations paid, and saving for your new home, while scores are indeed important, there are many other factors to consider when buying a home.

[bdhu2001]

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@Anonymous wrote:

The more Im dealing with credit the more i get confuse and I will never understand the credit system work.

I've been rebuilding my credit since July 2014 with a 515 score......Untill recently my score went up to 760 which is very good job i am proud of myself.

Now I was at the begining stage of getting mortage and talk to a few LO....They have recommend me to paid off and down our debt since we (wife and I) have high income to ratio which I do agreed with the LO and it make since.

Since we have cash to paid off our loan and down some of our debt so we went ahead and do it.

Last 2 weeks I have paid...

PAID OFF 2 personal loan about 5k total (me)

PAID OFF 1 auto loan 8K total (me)

ReFinance our auto loan and paid 10K down toward payment. From 675$ payment to 385$ payment.  Close exiting loan and reopen new loan after refinance.

With these 4 personal loan and auto loan been paid off and refinance my score drop from 760 to 650 WOW!!!

Now  this is from Equifax site only..I'm not sure about my fico score yet since I didnt get any update.  My Experian drop 4 point which I understand and expected, my transunion heavent move yet.

Will all these activity will drop my fico score down a lot? will I be qualify for mortage? 

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Are you using "Score Watch" or Score Power with Equifax?  The other scores aren't FICO scores and arent't worth tracking for your purposes.  If you are, then It looks like you changed your installment Util% to 100% or over 90%.

Do you still have two installment loans?  Did your utilization or usage of RV change?  I'm thinking that the Refinance may have left you with one or two.  Your loan officer was advising you of best options for DTI, not FICO score.  If you give us more detail, with true FICO result, we may be able to assist you better.

Know that whatever the situation, you can recover your points quickly if you have access to funds. Worst case scenario, based on info you provided: you may need to pay down your new instalment loan and possibly get a shared loan. 

[Anonymous]

im using FICO score watch and Its my FICO score ...I just cant beleived that it drop so much.  I did expected to drop 10-15point at most but what the hack.  I was planning to get the ball rolling in 2-3months from now. 

I went a head and paid down all my debt as nesscesarry because my FICO score are high, I didn't worry about score drop 10-15point.  

One of my auto loan has not yet taken out and closed in my credit file, that will drop more point .

also the auto loan I refinanace have not show up yet, maybe next month that will drop even more point when new trade added to my file and that will even lower down my AAoA

OMG!!! what I have done.  I worked so hard to get my score up that high.   

I completely understand its a temp drop, but understand when you work so hard and starting from rebuilding 515 score to a high 700s its hard to accept 110points over night.  I can not gain 110points over night, now I have to hold back my mortage  untill my score hight 680 and above to get a better rate.  I know I can get mortage now, but rate will not be the same.

I was hoping to move in this summer, maybe by fall the latest I am not sure If I can even get more score up that high by that time.

[bdhu2001]

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@Anonymous wrote:

im using FICO score watch and Its my FICO score ...I just cant beleived that it drop so much.  I did expected to drop 10-15point at most but what the hack.  I was planning to get the ball rolling in 2-3months from now. 

I went a head and paid down all my debt as nesscesarry because my FICO score are high, I didn't worry about score drop 10-15point.  

One of my auto loan has not yet taken out and closed in my credit file, that will drop more point .

also the auto loan I refinanace have not show up yet, maybe next month that will drop even more point when new trade added to my file and that will even lower down my AAoA

OMG!!! what I have done.  I worked so hard to get my score up that high.   

I completely understand its a temp drop, but understand when you work so hard and starting from rebuilding 515 score to a high 700s its hard to accept 110points over night.  I can not gain 110points over night, now I have to hold back my mortage  untill my score hight 680 and above to get a better rate.  I know I can get mortage now, but rate will not be the same.

I was hoping to move in this summer, maybe by fall the latest I am not sure If I can even get more score up that high by that time.

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Again, if you have the funds, your score will recover quickly.  Do you have the funds to pay down the refinanced vehicle?  Pay it down to 79%  Do you still have another installment loan.  If seen people use Alliant for a share loan and get a 20-35 pt increase in score.  If you will still have two installment loan, I don't recommend the shared loan.  If you will have only 1, get the shared loan and as soon as it hits your credit, pay it down to 5%.

Do you know what type of hit your mortgage scores took?  Your mortgage scores and your FICO don't necessarily move by the same amount. If you have the funds, your score can recover in 3-6 months max.  If you don't, then only timely payments will help you recover; but your score will still recover.