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Established Member
eyesopen
Posts: 28
Registered: ‎03-02-2009

Auto payoff - negative impact on my score?

Hi All.

I'm about to pay off my 2nd car loan. 

 

Will the payoff reduce the number of active accounts that are currently "helping" my score"?

And is the amount financed included in the calculation for total utilization?

If yes to either then it looks like the pay off might actually hurt my score.

 

Thoughts/advise is appreciated.

Thanks.

 

 


Starting Score: 647
Current Score: 770
Goal Score: 800


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Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: Auto payoff - negative impact on my score?


eyesopen wrote:

Hi All.

I'm about to pay off my 2nd car loan. 

 

Will the payoff reduce the number of active accounts that are currently "helping" my score"? Yes it will show this account paid and closed but even closed accounts are factored into your credit mix.

And is the amount financed included in the calculation for total utilization? Installment loans like cars have a very tiny part of utilization but it's so small it's not enough to be concerned about. It's revolving credit utilization that is the most important. BTW congratulations on the debt pay off!! IMO debtpaydown/payoff should always be the #1 priority.

If yes to either then it looks like the pay off might actually hurt my score.

 

Thoughts/advise is appreciated.

Thanks.

 

 


 

Established Member
eyesopen
Posts: 28
Registered: ‎03-02-2009

Re: Auto payoff - negative impact on my score?

Thanks for the speedy reply.

Much appreciated!


Starting Score: 647
Current Score: 770
Goal Score: 800


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Valued Contributor
IOBA
Posts: 2,659
Registered: ‎08-13-2009

Re: Auto payoff - negative impact on my score?

eyesopen - When I paid off my personal loan, my FICO score dipped a little.   The following month, it bounced back to a new high.  (Higher than it was when I had the loan.)

Established Member
Tikon
Posts: 37
Registered: ‎04-23-2012

Re: Auto payoff - negative impact on my score?

not having any non-student-loan installment account hurts you credit.The information above is overly simplistic.If all you have is revoling accounts and student loans you will lose points for diversification. Paid off mortgages and auto loans do not count towards diversity, although they do count as positive payment histories.

Credit cards: $5400 AmEx BlueCash Everyday, $5000 BOA Signature Visa, $5500 Discover, $4000 Citi Plat Select, $1500 CapitalOne Platinum, $5000 B&N Barclaycard, $5000 Elan Financial, $4700 Chase Freedom, $2000 CapitalOne Journey (AU), $500 Chase Amazon, $600 Shell, $500 Kohls, $500 Goodys, $450 JCPenny
Established Member
Tikon
Posts: 37
Registered: ‎04-23-2012

Re: Auto payoff - negative impact on my score?

I guess to rephrase: someone with less debt but no mortgage will have worse credit than someone with high debt in the form of a mortgage and auto loan all other factors the same assuming the accounts have had time to mature.

Credit cards: $5400 AmEx BlueCash Everyday, $5000 BOA Signature Visa, $5500 Discover, $4000 Citi Plat Select, $1500 CapitalOne Platinum, $5000 B&N Barclaycard, $5000 Elan Financial, $4700 Chase Freedom, $2000 CapitalOne Journey (AU), $500 Chase Amazon, $600 Shell, $500 Kohls, $500 Goodys, $450 JCPenny
Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007

Re: Auto payoff - negative impact on my score?

OP, a couple of years ago my only loan was an auto loan. I knew exactly when it reported and paid down 20% of the org. balance down to $0 in one month (tired of paying interest). I pulled the day before and the day after it reported to see the difference in FICO score. With no other changes, IIRC, EQ increased 7 points and TU dropped 5.

Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: Auto payoff - negative impact on my score?


Tikon wrote:

not having any non-student-loan installment account hurts you credit.The information above is overly simplistic.If all you have is revoling accounts and student loans you will lose points for diversification. Paid off mortgages and auto loans do not count towards diversity, although they do count as positive payment histories.


Ah but they do. Closed accounts are still counted in your credit mix.

 

And student loans are looked at and factored the same way as any other type of installment loan.

Established Member
Tikon
Posts: 37
Registered: ‎04-23-2012

Re: Auto payoff - negative impact on my score?

[ Edited ]

Credit cards: $5400 AmEx BlueCash Everyday, $5000 BOA Signature Visa, $5500 Discover, $4000 Citi Plat Select, $1500 CapitalOne Platinum, $5000 B&N Barclaycard, $5000 Elan Financial, $4700 Chase Freedom, $2000 CapitalOne Journey (AU), $500 Chase Amazon, $600 Shell, $500 Kohls, $500 Goodys, $450 JCPenny
Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: Auto payoff - negative impact on my score?

[ Edited ]

 

Hi Tikon,

 

I noticed you seem to be having some trouble posting. It is possible to edit your own post if you have posted an incomplete message. To edit your post, go to the post. To the right you'll see "Options." Click on "Options" and select "Edit Message" from the drop-down menu. If you have accidentally posted a duplicate message, you can use the “Report Innappropriate Content to a Moderator” link to ask the moderation team to remove one for you. To find this link, go to the duplicate post, click on "Options," then select "Report Innappropriate Content to a Moderator" from the drop-down menu. If you need any help with anything, let me know.

--MarineVietVet, myFICO moderator


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