@Spock wrote:I made my last auto loan payment a couple of weeks ago. My score just dropped 21 points! Huh? I prove I pay my debts on time and get rewarded by a massive drop in my credit score. I have NO negatives on my report. This just reinforces my belief that the entire credit industry is a massive scam. I'm so frustrated right now. I was planning to apply for a personal loan for some home repairs. But now my score dropped to a level that the interest rate will be higher. So according to the credit industry had I taken out the second loan while I still had the car loan, increasing my debt and monthly payments, I would have been a better risk than I am now for having been responsible and waiting to take out a new loan until a previous one was paid off. Absolutely ridiculous! Someone... please explain the "logic" of that.
Welcome to the forums!
It's FICO 8 =/. Didn't happen on the older algorithms anywhere close to the same extent, basically it's either looking for a mix of open tradelines, or we found there's a non-trivial benefit to having a low balance/utilization on open installment loans, or both. We're still trying to figure that out at the moment honestly.
Getting the personal loan may likely help with it somewhat but at this point I personally doubt it'd be a full score recovery. Also it might not matter at all since a lot of places that are issuing personal loans are underwriting on an older version of the scoring algorithm... from personal experience, I paid off two installment loans and it dropped my FICO 8's a bunch, but my mortgage scores have never been higher, cleared 720 when I was wishful thinking for a 700 before I made the pull.
I will ask, if you dropped 21 points for an auto loan closing you probably have an incredibly pretty score to begin with (and probably to end with too), what is the new score as anything over 740 is at most places is a wash and 760 is the gold plated breakpoint for every product from every lender seemingly.
Anyway I agree it sort of sucks from a consumer perspective and I don't know what data FICO found to include this in their risk analysis but it's what we have to work with. Maybe not a scam, but awkward mechanic to be sure. Certainly from a lender underwriting perspective, any closed positive tradeline is a good tradeline.
Ugh, I can empathize and I sort of thought with my own report and experiences you'd be at a higher tier.
To be utterly blunt, and bear in mind I am just a former volunteer on the forum not any sort of FICO person, I don't know if the monitoring over time really makes a lot of sense at the price point for people that have a good handle on the broad strokes of the algorithm. You are correct the only score that matters is the one the lender pulls, and there's enough information here that people can survive on a free monitoring solution for all the big stuff (like identity fraud) and then optimize reports to be pretty close to as good as possible on their own when it's go time.
I personally get WAY more value out of the instant-in-time 3B pull than I do the monitoring solution. I geek out over this stuff though and I know my credit report possibly better than anyone should from a sanity perspective, but at $240/year that's what, four pulls 3B without the discount for all the scores? I don't have four application times during a year, and for that matter I don't really have six major changes in my report in a year either, and since the lender may pull any of them, I'm sort of interested in the full scorecard as I'm sophisticated enough to have a pretty good idea of what 2-3 scores they will be pulling. Really once I get clean and I wind up with more tradelines than I actually want for anything other than testing purposes and I get bored with testing, I'll probably just pull 3B once a year every Jan 1 unless I have an application coming up, and that's only for tracking historically over time.
The economics don't make a tremendous amount of sense to me looked at that way for the always on monitoring service. I still think CK's the most brilliant solution on the planet for my regular needs, and that doesn't cost a dime... though all of the price points have to come down, charging what the market will bear in an environment where consumers are scared of identity theft. YMMV as result.
CK = Credit Karma. Free access once per week to both Transunion and Equifax report data.
My own experience with stolen data, it's been caught by the lenders every single time but once, and the one time it wasn't it was stupid easy to get it fixed.
I don't apply that often generally, and other than a house or auto loan I'm OK with a 5 week window (or even a 2 month window with some other score services from my various cards) to fix I'm not too worried but that's me. I do appreciate your insight and viewpoint though, it's interesting to see how people are reacting to it and judging by some of the stock tickers, I'm the outlier in this.
It would be most excellent if we got better access to the data but we're not in a terrible place right now as compared to even 3 years ago in my opinion when I first started looking into the credit world.
I would like to add also as I am following my updates on myfico. I just traded in my car. Today i got notification of an update and went in to see that is now reporting a zero balance and my score dropped today 19 points. That car loan payoff was the only change. So yes I can attest to the fact that paying off the car loan dropped my score. My new loan has yet to report so idk what'll happen at that time. 
@Anonymous wrote:
I would like to add also as I am following my updates on myfico. I just traded in my car. Today i got notification of an update and went in to see that is now reporting a zero balance and my score dropped today 19 points. That car loan payoff was the only change. So yes I can attest to the fact that paying off the car loan dropped my score. My new loan has yet to report so idk what'll happen at that time.
You won't get them back; we've pretty much determined it's all in installment utilization when we're talking FICO 8.
If you have some pretty line like $2000/$30000 left (for example) and then trade in and get a new line of $25000/$25000, this is expected if you don't have some other installment line to offset the change which sounds as if you did not with that magnitude change.
Full gory details: http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Installment-tradeline-utilization-thread/m-p/4055989#U4055989