Paid off Student Loan - 30 point drop

[Anonymous]

It was my only open non-mortgage installment loan.  I guess I need to go buy a new car to get my FICO back up. (Not happening)

[Anonymous]

You can open a $500 secured loan and pay it down to $50 or so, and it will help your score and cost you very little. 

[Anonymous]

I'm still hovering around 800 on all three.   It wouldn't be worth the AAoA hit to open a new loan just to game my scores.  If something takes me below 750 I'll consider it though.

[Anonymous]

Didn't know they were hovering so high, I would definetly say you are fine then haha

[Anonymous]

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@Anonymous wrote:

It was my only open non-mortgage installment loan.  I guess I need to go buy a new car to get my FICO back up. (Not happening)

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Does this mean that you do have an open mortgage?

[iheartwings]

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@Anonymous wrote:

It was my only open non-mortgage installment loan.  I guess I need to go buy a new car to get my FICO back up. (Not happening)

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First of all, kudos to you for paying off your student loans! I wish I were so lucky, but I am continuing to plug away and am looking to be done in about 6 years.

Second, this is so interesting. There is a discussion where we are trying to figure out if student loans are, whilst being installment, different from an installment loan, such as an auto loan. This might argue that they are not different from a regular installment loan, or it might argue that you would have to potential to lose even more points if it were a regular installment loan (my scores dropped about 18-20something points when my auto lease closed out, and all I had left is one albatross of a student loan). 

If you're hovering around 800, I think you'll be fine in getting great rates for whatever products you apply for (i.e., mortgage). If you're itching to get your 30 points back, you could go the SSL route, but as you point out - you don't want the AAoA hit, which I can totally understand (I also didn't want to do the SSL route to see if my student loan was different, yet - I'm going to try to get my balance:loan ratio back to what it was just before my auto loan closed out to see if I get my points back before I commit.) 

[Anonymous]

Yes, the credit factors on MyFICO are dinging me for not having any active "non-mortgage installment" loans/accounts now.  It looks like having a history of them isn't enough.  To max scores, you have to have active loans other than mortgages. Student loans count.

[Anonymous]

Hey Textret.  Can you clarify whether you have an open mortgage?

[Anonymous]

I'm in the middle of construction on a VA loan. The mortgage has not reported yet.  The Credit Factors section on MyFICO now says: "You have no recent activity from a non-mortgage installment loan."

I'm not sure how just having paid it off equates to "no recent activity", but that's the change.

The expanded description says: "Your credit report shows no recent non-mortgage loans (such as auto or student loans) or sufficient recent information about your loans. Having a loan along with other types of credit demonstrates that a person is able to manage a variety of credit types." 

[Anonymous]

OK.  That's all much clearer now.  In your initial post, it didn't sound like your were quoting a reason code.  It sounded like you were letting us know that you had a mortgage, but that the student loan was the only installment loan apart from that.

If that had been the case, it would have been REALLY interesting.  I.e. to have an open mortgage, have your SL close, and then take a huge dive in your score.  Because of course you would have still had an open installment loan reporting (the mortgage).

But as it turns out, nothing that wild actually happened.  What did happen was this:

You had one and only one open installment loan.

You paid it off.

And you lost a lot of points.

This is pretty common, especially when the amount a person owes just before payoff is small compared to the amount of the original loan.  For example, if the original loan was for 10k and you owed $870 at payoff.

Would you mind telling us how much the loan was for and how much you owed at payoff?

Interesting to hear that you have a new mortgage that has not reported yet but will be reporting soon.  That is the reason that adding an SS loan wouldn't make sense.  Not because the SS loan would affect your AAoA, but because you are about to have a huge installment loan reporting very soon anyway, and therefore the SSL wouldn't help.