Understanding FICO® Scoring

[algorithmslave]

The information provided here stands to reason. If it was not true it would not be fair, ie....if someone has two revolving accounts and two installment loans all with a late payment or two but closes all out with PIF and closes at consumer discretion, than only the negative would count and thus completly wreck ones score. This would not be an accurate snap shot of ones ability to manage credit. Thus by counting closed accounts, it would fix this issue. I think that made since........

[youngwidow]

Explain why when I just payed off my mortgage that my FICO dropped according to my score alert

[youngwidow]

This was my mortgage. I paid it off. To me, that should have increased it. Also, it is impossible to keep a mortgage account open once it is paid off.

[youngwidow]

I have scorewatch. Totally crazy that paying off a mortgage would lower your score. The system is broken

[DaveSignal]

The opening post for this thread was a correct post about AAoA.  Your score dropped when you paid off the mortgage because there is also a FICO scoring area for "types of credit" and you lost a major type of credit in your mix of accounts by closing the mortgage account.   Nobody said that FICO seemed like a reasonable scoring method.  It's not broken, this is just how FICO works.  I think some of the reasons my score fluctuates are crazy too, but it is what it is and this what the lenders use.  

[llecs]

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youngwidow wrote:
Explain why when I just payed off my mortgage that my FICO dropped according to my score alert

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The only FICO product that offers a score alert is ScoreWatch. Is this were you saw the alert? If so, take the score alerts with a grain of salt. Any score change is a net change of one or many factors that changed the score. If it dropped, there could be other things that factored into the score change like balance increases, utililization changes, whether or not other accounts were added or removed, and so on. If you have other loans reporting, a change to $0 wouldn't likely do anything at all to your EQ FICO. Converely, you don't loose points for adding a $500k mortgage as an example (other than the new acct ding). Paying it off wouldn't do anything either.

[youngwidow]

I have scorewatch. Still it makes no sense because how can a paid off mortgage account ever be kept open?? I had a conventional mortgage? It would stand to reason that paying it off would raise your score.

[CultivatingCredit]

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

D

[llecs]

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CultivatingCredit wrote:

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

D

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Right. It's not uncommon for those with older mortgages to have a length of credit history of 20-30-40 years.

[CultivatingCredit]

CultivatingCredit wrote:

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

D

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Right. It's not uncommon for those with older mortgages to have a length of credit history of 20-30-40 years.

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Not just mortgages but revolving credit cards?