Effect on score when closed mortgage drops off

[jello77]

Closed accounts normally drop off your credit report after 10 years. When my closed mortgage was due for drop-off recently, I was curious about the effect on my score. 

I expected my score to decline for two reasons:

Credit Mix

About 10% of your score is based on the variety of credit types you have. Having a diverse "credit mix" (credit cards, mortgage, auto, etc.) helps your score. Closed accounts are included in your credit mix. My only other accounts are credit cards, so without the mortgage, my score should decline.

Average Age of Accounts

About 15% of your score is based on length of credit history. My mortgage account was 32 years old. After drop off, my Average Age of Accounts would decrease, and my score should decline.

Here is what actually happened:

________________________Before drop-off_____After drop-off

Oldest account_______________34 years__________34 years

Average age of accounts_______14 years__________12 years

Transunion FICO score___________783_____________783

Equifax FICO score______________812_____________811

Experian FICO score_____________818_____________816

Here is my best guess for why the drop-off had so little effect:

(1) As a closed account gets older, the FICO formula probably gradually reduces the effect it has on the "credit mix" part of your score. After 10 years, it may contribute so little to your score that dropping off has almost no effect. 

(2) Although 10% is the average, the actual weight given to "credit mix" in calculating your score will vary according to what "scorecard" you are on. Because I have a clean credit report with a long history, I am probably on the top-tier "scorecard." For my scorecard, credit mix may have less weight.

(3) Paid off mortgage accounts are usually quite old. For many people, the biggest hit to their credit score for a mortgage drop-off probably comes from the effect on Average Age of Accounts.  But because my other accounts are also quite old, my average age took only a minor hit.

Does this theory make sense?

Has anyone else had a mortgage drop off your report? What effect did it have?

[llecs]

What type of account is the 34-year old TL?

Are the same accounts across all 3? Asking because some of us have 3 different AAoAs.

What's the source for the score? Can you rule out different FICO versions as a source of error?

Congrats on the scores, BTW.

[jello77]

Ilecs:

My 34-year account is a credit card. I had sock-drawered it for so many years I almost forgot about it. Luckily it was never cancelled for inactivity. After I learned the importance of credit history age from this forum, I began to "exercise" it twice a year to keep it toned and fit.

All agencies have the same accounts.

EQ score is from DCU credit union, which provides it free monthly to members. Learned about it from this forum. Same version that is available from MyFICO.

Experian score is from PSECU credit union, which provides it free monthly to members. Luckily I live in Pennsylvania and qualified to join. Learned about it from this forum. This seems to be the only source for a consumer to get the EX score.

TU score is from MyFICO, which is lower than the others because I have 3 inquiries from getting new credit cards last year. First new accounts in about 10 years. I'm really slow at the credit card game, which inadvertently turns out to be healthy for your credit score.

One of the new cards I got recently is Walmart, which also provides a TU score free monthly to members. But it uses the 2008 edition of FICO instead of the 1998 edition that MyFICO uses. My current Walmart FICO score is 822 but I can't compare it before and after the mortgage drop-off because I didn't get the first Walmart score until after the drop-off.

[llecs]

Cool synopsis. Yeah...a fellow score junkie. I personally would be worried about the oldest installment (the mortgage) losing that history. Good to know that it wasn't much.

[IOBA]

jello77 - I started to congratulate you on NOT having a mortgage when I realized that you might still have a mortgage and you were sharing information on an old one.

Still congratulations are in order - Congratulations!!

[jello77]

IOBA:

Happy to say I no longer have any mortgage. Only have credit cards on my report now.

My case illustrates that it's possible to have an 800+ score even without the diverse "credit mix" that FICO prefers to see.

My guess is the scorecard for people with long credit histories might put less weight on credit mix than the standard 10%. 

[FrugalRican]

My DGF has a 800+ and has no mortgage nor a car payment.

She HAD a mortgage though, but it was paid off years ago. She buys her cars cash.

All she has are about 5 to 6 different CC's. So, I can attest as well to the fact that it can be done solely on CC's, but the history of a paid mortgage might be helping as well(?).

[MattH]

Interesting, though it will be some time before this will be of practical importance to me: my wife and I could pay off our mortgage tomorrow, but that would seriously deplete our emergency funds. As others have noted, typically somebody with an old paid mortgage dropping off their history will have a long and clean history in all other respects so their scores will be pretty high either way.