Closed 8/14 But My FICO Was Dropping Fast!!

[Anonymous]

Sad part was there was NOTHING I could do to stop the bleeding.

Sold my house early July, closed last Friday.

In the meantime:

1. I had a credit check in connection with my new mortgage. -1 point

2. Changed address since I needed a place to live for a month and a half -1 point

3. Paid off my old mortgage. -3 points

4. Made the final payment on my car loan -1 point

4. Called Comcast for new service, had no idea they did a hard pull. -5 points

Within two weeks I went from 755 to 744.

Good news, apparently lender didn't really care, but it was making me pretty nervous!!!

[Anonymous]

Was this score drop before close? I'm very nervous because our lowest mid is exactly at 740 at time of application. The only reason we're getting this loan/rate is bc of the 740. We're locked and the file is in UW, but do lenders pull scores before closing or just a report showing new/high balances? What happens if someone's score drops out of the top tier rate just before closing?

[StartingOver10]

Congratulations on your new home!  Yea...lender didn't care because you are in a good place anyway. They probably didn't even pull a new report before you closed, did they?

[Anonymous]

Pretty much what happened to me.

-paid off 6 yr installment loan 6 weeks before closing- 12-18 point drop depending on bureau

-change of address -4

-mortgage pulled my report 3 times in last 6 weeks -2

I did find out old account 5+ years pays out- GET READY. I don't understand the punishment, the 6 years I paid on that loan was perfect, make the last payment and WHAM!

[Revelate]

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@Anonymous wrote:

Pretty much what happened to me.

-paid off 6 yr installment loan 6 weeks before closing- 12-18 point drop depending on bureau

-change of address -4

-mortgage pulled my report 3 times in last 6 weeks -2

I did find out old account 5+ years pays out- GET READY. I don't understand the punishment, the 6 years I paid on that loan was perfect, make the last payment and WHAM!

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FICO 8 yes, but 2/3 of the mortgage trifecta aren't affected by this.  Experian only as it's a '98 algorithm.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Installment-tradeline-utilization-thread/m-p/4055989#U4055989

Change of address: doesn't affect FICO, something else changed.

Mortgage pulls: they have a 30 day grace period (and do roll up / dedupe scoring wise for a minimum of 14 days), once that 30 days is up though you will get a single scoreable inquiry against you assuming you didn't have pulls over an extended period of time.

To all - FICO's a complicated animal but it's not magic... and using FICO 8 monitoring isn't relevant for mortgage scoring purposes with the one exception of a single portfolio lender we've seen on this forum.

@Anonymous: congrats on the close!

[Anonymous]

Well.... 'why' would paying off a loan after all that time be a drop on your FICO 8?   Utilization would be down, one less payment, good history....  Do installment loans just get figured differently?  Can you explain?

[Revelate]

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@Anonymous wrote:

Well.... 'why' would paying off a loan after all that time be a drop on your FICO 8?   Utilization would be down, one less payment, good history....  Do installment loans just get figured differently?  Can you explain?

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TL;DR - FICO 8 (and FICO 98 too at least for part duex) calculate on two things:

• Installment line open
• Installment line utilization (aggregate for sure, don't think it's individual line based on my data anyway).

As a result, paying one off will change your installment line utilization for certain, and seemingly no open installment loans may be the same as brand new ones from a scoring perspective; hard to say.  

Longer gory thread if you have the patience or interest to read through it:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Installment-tradeline-utilization-thread/m-p/4055989#U4055989