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Paying off my car loan ruined my credit. Score dropped 70+ points.

Super Contributor

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.

Feel your pain. My mortgage reported paid zero and my fico dropped more than 20 points and no hopes for an improvement. Yes, this is one of the mix categories factoring into the Fico Score.
Starting Score: 802
Current Score: 821
Goal Score: 850


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Moderator

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.


Wanderer wrote:
Feel your pain. My mortgage reported paid zero and my fico dropped more than 20 points and no hopes for an improvement. Yes, this is one of the mix categories factoring into the Fico Score.

Trivial secured installment loan *shrug* $20 over 4 years for 20 points.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Regular Contributor

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.

I just had this same thing happen to me. 

 

I had a 710 score about a month ago. Just checked my score 672. Nothing has changed. My util is under 10 percent. Im puzzled. I go and read this thread and it might make sense. About a week ago i sold my car and it showed on this new credit report as balance of zero. Opposed to the 24k balance it had a month ago. 

 

What will be interesting is i pick up a new car next week that should be around 35k showing up on that lease. (it only shows the balance you pay during the lease terms, thats all thats reported). I will watch and see if my score increases after the initial hits. 38 point drop is insane though. 


Current EQ:719 EX: 701 TU:713


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Frequent Contributor

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.

I wanted to chime in. 

 

I just got my car refinanced. So both loans were showing my score jumped 20 pts. When the paid off loan finally reported a zero balance it dropped my score 6 points.

 

We are definitely penalized for paying items off. The system is not made for our benefit at all. The more debt you have the more your score goes up. Which is asinine and backwards logic.


Equifax - 658, Experian -628, Transunion- 704 In the garden until 01/01/2016
Valued Contributor

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.


CreditGuy03 wrote:

 

The more debt you have the more your score goes up.

 

Thankfully that's not how it works. But more accounts with small balances sometimes help.

 

Blogger

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.


CreditGuy03 wrote:

The more debt credit accounts you have manage well the more your score goes up. Which is asinine and backwards logic.  makes perfect sense because your credit score reflects how well you manage credit.


IFYP

Frequent Contributor

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.


HiLine wrote:

CreditGuy03 wrote:

The more debt credit accounts you have manage well the more your score goes up. Which is asinine and backwards logic.  makes perfect sense because your credit score reflects how well you manage credit.


IFYP


If it only were this simple. Paying off a loan drops your score. Which is the whole reason for this thread in the first place.

 

That means you paid off a debt. Paying off a debt does not work in your favor in the eyes of credit scores. 

Why the need to keep 1 card under 9% util and others at zero? Why even have to manipulate the system like that just to have better credit? 

 

Why is it that when paying off charge offs or collections nothing happens to your score when logic will tell you that these accounts should be factored against at a 50% less rate. The whole entire system is a sham. Even down to having to PAY for information about our personal lives.


Equifax - 658, Experian -628, Transunion- 704 In the garden until 01/01/2016
Blogger

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.


CreditGuy03 wrote:

HiLine wrote:

CreditGuy03 wrote:

The more debt credit accounts you have manage well the more your score goes up. Which is asinine and backwards logic.  makes perfect sense because your credit score reflects how well you manage credit.


IFYP


If it only were this simple. Paying off a loan drops your score. Which is the whole reason for this thread in the first place.

 

That means you paid off a debt. Paying off a debt does not work in your favor in the eyes of credit scores. 

 


That's right. Paying off a debt does not work in your favor. People cannot demonstrate their ability to manage credit if they don't have credit. 

 

One could argue that by paying off debt, one can demonstrate more financial responsibility because he doesn't need the debt. However, such an argument would miss the point. The credit history is not about how much money you have; the only thing it shows is whether you are looking for debt, and how you manage debt once you have it. If you are not looking for debt, this helps your credit profile. And if you are not currently managing debt, then who's to say if you're able to manage debt when you have it? 

New Member

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.

My new loan reported and my fico score jumped back up 10 points. I guess it was a temporary hit.

New Member

Re: Paying off my car loan ruined my credit. Score dropped 70+ points.

Mine too dropped exactly 16 points.  Not only did it drop 16 points but it dropped another 4 points when the new auto loan opened.  See I refinanced my car and it cost me 20 points on my credit.  What a horrible system, It should raise your score for being financially responsible.  I refinanced my car to get a lower interest rate and they reward me by killing my FICO.  Oh by the way it seems to have only been Equifax that does this refinancing did nothing to my Transunion score.