Paid off loan and score went down. Any idea why?

[Anonymous]

I just paid off a student loan and according to score watch my Fico score went down a few points. I don't understand why this would lower my score. Can anyone provide insight?

[GregB]

If it was your only Installment loan and it was paid off, your score may lose a couple points. It isn't a trend down. Of course your DTI now looks better and you are saving money, etc.

[kjm79]

+1

[Anonymous]

Thanks for the replies!

This isn't the only installment loan. I do have a few other student loans as well. I'm curious to what the rationale is behind the score going down. This was also the most recently open loan that was still active. Shouldn't that increase my average age of accounts?

I'm not really too concerned that my score is a few points lower. Again, I'm just trying to understand the reasoning.

[kjm79]

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@Anonymous wrote:
Thanks for the replies!

This isn't the only installment loan. I do have a few other student loans as well. I'm curious to what the rationale is behind the score going down. This was also the most recently open loan that was still active. Shouldn't that increase my average age of accounts?

I'm not really too concerned that my score is a few points lower. Again, I'm just trying to understand the reasoning.

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If this was the only open installment loan, when you paid it off and it closed, then you no longer had an OPEN ACTIVE installment account and that's where the loss in points came from. 

Your AAoA includes all open and closed accounts on your report.  Opening a new account doesn't increase AAoA, it lowers it.