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My home mortgage was recently sold by HSBC to another mortgage company, and as a result the existing mortgage line was reported as closed with a status of "transferred". The account with the new servicer has not yet been reported and may not for some time.
Granted, inferring specific triggering event from myFICO alerts is somewhat like reading tea leaves, but based on the timing across the three bureaus it would appear that the closing of the mortgage account led to a 16-point drop for in FICO 8 for two bureaus and a 20-point drop for the third.
Is this typical?
@Anonymous wrote:My home mortgage was recently sold by HSBC to another mortgage company, and as a result the existing mortgage line was reported as closed with a status of "transferred". The account with the new servicer has not yet been reported and may not for some time.
Granted, inferring specific triggering event from myFICO alerts is somewhat like reading tea leaves, but based on the timing across the three bureaus it would appear that the closing of the mortgage account led to a 16-point drop for in FICO 8 for two bureaus and a 20-point drop for the third.
Is this typical?
If it was your only installment loan (or maybe not even talking mortgage) and it was at a pretty balance to original loan ratio or your other loans are at decidedly unpretty ratios, then yes, quite possibly.
That said you should recover when the new servicer reports.
Thank you for explaining, Revelate.
I'm still scratching my head over this because the old servicer account wasn't deleted from the credit file, just closed, notated as transferred, and the balance zeroed out. To the algorithm this should look (for the time being) equivalent to the payment in full.
Is what you're saying that FICO looks at closed, paid installment accounts differently than open ones? How does that work?
@Anonymous wrote:Thank you for explaining, Revelate.
I'm still scratching my head over this because the old servicer account wasn't deleted from the credit file, just closed, notated as transferred, and the balance zeroed out. To the algorithm this should look (for the time being) equivalent to the payment in full.
Is what you're saying that FICO looks at closed, paid installment accounts differently than open ones? How does that work?
Yes, bizarrely FICO algorithms penalize you for having your installment loans 100% paid off. The reasoning supposedly is that you no longer have a great "credit mix".
I personally think the real reason is that FICO is actually about making money for banks, and debt-free people aren't what they're looking for