@CreditDunce wrote:
@Anonymous wrote:
Hello, can anyone explain to me why paying off my student loan would cause my Fico score to go down 15 points?
If it was your only installment loan, then you can get dinged for credit mix. FICO 08 scoring likes to see at least one open installment and two open revolvers. If you still have other installment loans, it is probably just noise. Your credit score can vary quite a bit based on your current reported revolving utilization.
Here is a long thread with more information and how to avoid the penalty for not having an installment loan. Personally, I wouldn't get a shared secured loan unless you are working towards buying a house and have a marginal score:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/penalized-for-not-having-installment-loan-what-does-this-mean/td-p/3151642
Congratulations on paying off the loan. Saving money always trumps worrying about FICO scoring.
Exactly
it really has nothing to do with the fact that your loan is paid. off.
car , student . mortgage or any other kind of installment loan.
Once the loan is paid off and it is your only installment. then you lost the account mix. all you have left are credit cards.
which the mix is 10 percent of score.
so to see a 15 -30 point drop is normal.
your score will rebound however. even with out the installment loan so dont rush to get that for that lousy 15 points. your lost.
people think of it as being punished. but if you read how fico scores. it is just like a computer. do this. that happens. do that. this happens. just that simple.
me to solve. this.
I opened a 4 year installment secured loan. from my savings. 12 dollars per month. automatic payment to the loan. don't even have to think of it.
and since it is using the 500 i have in savings. in fact/. i don't even have to pay. the money in savings earn interest. and after the 4 years. it will be over a 1000 in that account. i will then turn it over and do it again. just keep recycling. that loan. just to help my score always. Good luck.
