Auto loan payoff = -1 point

[Matt33445]

I just paid off one of two auto loans. I would think the reduction to my debt-to-income ratio would raise my score. I don't understand why closing the account would penalize me. Anyone have any idea of what's going on?

[Anonymous]

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@Matt33445 wrote:

I just paid off one of two auto loans. I would think the reduction to my debt-to-income ratio would raise my score. I don't understand why closing the account would penalize me. Anyone have any idea of what's going on?

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It's very common that when you close out any installment loan the FICO scoring model penalizes you.  Yes it does seem to be counterintuitive but the scoring algorithm likes to see a balance of different types of credit like installment loans and revolving credit.  You're actually lucky that you only lost 1 point.  Many others gets much larger decreases.

[Anonymous]

I just lost 17 points last night an another 23 today.  I lost a grand total of 39pts in less than 24 hours... The only difference is I paid off my installment loan.

[Anonymous]

FICO doesn't use Debt to Income ratio in the score calculation, because your income is not reported in your credit file.

One point is an insignifigant change, anyway. You cannot look at it as 'penalizing you'.