Score drop after late removal and installment payoff?

[Anonymous]

Hi all,

Trying to understand this particular case.

Account was reporting a % of installment due and 60 days past due. It was opened in May of 2016.

This was false as the account had been paid in full and not technically late.

Most recent late before that was 2015 for a medical collection that is still present.

I have an autoloan that has been being paid for 18 months. 9 Revolving accounts. 2 student loans 10+ years old. All in good standing/never late. ~12% util on one card (will be less than 10% next statement cut). Less than 30% util across total available credit.

Score had dropped when this appeared about 20-30 pts across the board.

Last weekend it was updated to be paid in full and never late.

Fico8 score dropped 6 points. 

Never been more confused.

[Anonymous]

When what appeared exactly did your score drop?  You sort of lost me there.  When the installment loan late info was reported as paid as agreed?  Since you have another negative item on your reports, the removal of one (of two) isn't going to yield much in terms of a score gain.

For my profile removing 1 of 2 negative items gave me 1 point.  Removing the second gave me 40.  Seriously diminishing returns exist for > 1 negative item.

So, it's feasible that you may have gained a point or two from having one negative removed, but perhaps something else in your profile resulted in a score drop of 7-8 points meaning your net decrease was 6.  I would think outside of rebucketing, the removal of a negative item would never result in a score drop.  And, since you have another negative present, I wouldn't think your bucket would change in this case, IMO.

[Anonymous]

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@Anonymous wrote:

When what appeared exactly did your score drop?  You sort of lost me there.  When the installment loan late info was reported as paid as agreed?  Since you have another negative item on your reports, the removal of one (of two) isn't going to yield much in terms of a score gain.

For my profile removing 1 of 2 negative items gave me 1 point.  Removing the second gave me 40.  Seriously diminishing returns exist for > 1 negative item.

So, it's feasible that you may have gained a point or two from having one negative removed, but perhaps something else in your profile resulted in a score drop of 7-8 points meaning your net decrease was 6.  I would think outside of rebucketing, the removal of a negative item would never result in a score drop.  And, since you have another negative present, I wouldn't think your bucket would change in this case, IMO.

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Not sure where the confusion is coming from.

The account was showing a high % owed compared to original amount (more than 75%). It was showing 60 days late for December/January. Most recent late prior to that was in 2015 for a medical collection. So a difference of recency from 1 month to 20 months.

When the account that was recently "late" reported in January the 2 months of lateness, my score dropped ~20-30 pts. 

Upon it being corrected, it was further reduced by 6 points.

Nothing else has occured since then other than other on time payment history updating on my other accounts. 

You state that the removal of the negative item would never result in a score drop, but it did. I am not going from alerts on MyFico, I am actually going from full pulls from Experian directly, so I know exactly what information is changing and when the score is updating.

[Aahz]

I'm finding your post confusing as well. There's too much information unrelated to the change in your reports and it's muddying the waters a bit.

But I think you're saying that the correction was not only the removal of the incorrectly reported late payment, but also changing the installment loan from open status to closed status.  Is this correct? 

If so, it is standard for scores to drop slightly when an installment loan is paid off and reported as closed.  This is because FICO's historical data shows that people with secured installment loans (mortgages, car loans, etc) are less likely to default then those with just unsecured credit.

[Anonymous]

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@Aahz wrote:

I'm finding your post confusing as well. .

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Glad I wasn't the only one.

[Anonymous]

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@Aahz wrote:

I'm finding your post confusing as well. There's too much information unrelated to the change in your reports and it's muddying the waters a bit.

But I think you're saying that the correction was not only the removal of the incorrectly reported late payment, but also changing the installment loan from open status to closed status.  Is this correct? 

If so, it is standard for scores to drop slightly when an installment loan is paid off and reported as closed.  This is because FICO's historical data shows that people with secured installment loans (mortgages, car loans, etc) are less likely to default then those with just unsecured credit.

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Correct.

I included the other information so no one asked me if I had revolving credit and other installment accounts.

I didn't realize unsecured installments were weighed differently than secured ones. So unless I need another unsecured installment loan, I cannot really recover these points directly, right?

[Anonymous]

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@Anonymous wrote:

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@Aahz wrote:

I'm finding your post confusing as well. .

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Glad I wasn't the only one.

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What is the purpose of this reply? 

[Anonymous]

Perhaps you should look into the SSL technique.  That could possibly get you the points back that you're looking for.

The purpose of my reply was simply to state I'm glad I wasn't the only one confused.  You didn't understand where my confusion was coming from, but when the second person that read your post also expressed confusion it validated my original thought.  No big deal, sometimes it's difficult to interpret things online as we're just reading words and not able to take in anything such as tone, non-verbal communication, etc.

[Anonymous]

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@Anonymous wrote:

Perhaps you should look into the SSL technique.  That could possibly get you the points back that you're looking for.

The purpose of my reply was simply to state I'm glad I wasn't the only one confused.  You didn't understand where my confusion was coming from, but when the second person that read your post also expressed confusion it validated my original thought.  No big deal, sometimes it's difficult to interpret things online as we're just reading words and not able to take in anything such as tone, non-verbal communication, etc.

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I was looking at this earlier, but was mentioned that people with a secured installment loan would not see a benefit and could see adverse affects from the lowering AAOA. 

I think maybe my best benefit would be to redirect some of my home downpayment funds to my car loan. 

Do you happen to know (or anyone else reading) which points at % result in bumps? The interest rate is insanely high, so I want to be careful about paying lump sums unless I am applying it to principle, but I need to keep the loan alive for a little while longer for scoring purposes.

[Anonymous]

What do you mean that they wouldn't see a benefit?  Hundreds of people on this forum have reported a 25-30 point gain when employing the SSL technique.  Now, if you have an open auto loan currently than the SSL technique will not improve your score.  You would want to open the SSL a cycle or two before you plan on paying off your auto loan so that it's in place and reporting by the time your auto loan reports closed.

As far as installment loan breakpoints, most believe the first to be at about 70%.  There may be others along the way, but taking it below 10% is what yields the greatest scoring benefit (the full 25-30 points).