Paid off car loan and score dropped 24 points. What gives?

[Anonymous]

Just checked husband's myfico and his score only dropped 5 points on this change. There are no other alerts so i don't think any thing else has changed on my report.

Any insight would be appreciated. Thanks.

[Anonymous]

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@Anonymous wrote:

Just checked husband's myfico and his score only dropped 5 points on this change. There are no other alerts so i don't think any thing else has changed on my report.

Any insight would be appreciated. Thanks.

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The FICO  scoring model likes a mixture of installment and revolving credit.  It very common to have your score drop when you pay off a car loan.

[HiLine]

Too many possibilities. The impact of a certain parameter depends on the rest of the credit profile. Perhaps informing us of how different your husband's credit profile is from yours will give us some hints.

[Anonymous]

I've heard this happens too. I'm nervous for when I pay mine off in about 1.5 years, because I might be looking for a home loan around that time. Its unfortunate that paying off all your debt to 0$ causes your score to drop sometimes..

[MarineVietVet]

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@Anonymous wrote:

I've heard this happens too. I'm nervous for when I pay mine off in about 1.5 years, because I might be looking for a home loan around that time. Its unfortunate that paying off all your debt to 0$ causes your score to drop sometimes..

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Remember though that a mortgage lender will likely pull the FICO 04 scoring model and it seems that model is not as sensitive to paying off installment loans.

Also you will have less debt and that will hopefully help your DTI when you apply for that mortgage.