Why did paying off a loan drop my scores by 16 points?

[jamie123]

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@CreditMagic7 wrote:

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Hi jamie

Some update. Paid off my longest term auto installment so i expect it to report after the first of next month and reflect as much as to my FICO scoring. I am in the process of getting an Alliant Shared Secured before my final installment personal loan meets term in March i think. This will leave the MIX for me down to a single one and only NEW Alliant Secured Loan which after it reports (so to measure it's initial impact) i intend to pay that down leaving around 9% remaining and let it ride out for the duration.

What's your take on the benefit with FICO scoring for me to this plan?

Regarding MIX, will just the new one you think be sufficient enough to prevent any serious free falls like we read about all the time?

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It appears that there is a small benefit by having a second installment loan but it seems to be only a few points and perhaps not worth the effort.

And yes, by having the $500 share secured loan reporting before you pay off the March loan you will prevent a major point loss like you read about on these forums.

[CreditMagic7]

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@jamie123 wrote:

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In my instance, i suppose if i open the share secured loan with a CU like Alliant around the first of 2016 then at the close of the final month when my current auto loan term is completed (and thereby shows closed/PIF) it should help prop up the FICO numbers or at the very least drop very little?

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Yes, it will keep your score from dropping.

We have found that it is best to get the share secured installment loan with Alliant and then pay down the balance to less than 10% remaining. This will push the next payment due date out years. (Don't set up autopayments.) You get a bump in points once your installment loan is more than 90% paid off. These are some of the points you lose once you pay off and close the loan.

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So i was told by the LO on phone notification the same day of loan approval that autopayments were set up automatically. I didn't challenge it as i was tied up with another matter at the time.

Should i call them sometime and just request that no autopayments are necessary? The funding is already added and the first due date is in March.

The SSL is already added to the online Alliant account page and so i assume it will upon first statement also report to the CRA's too. 

[CreditMagic7]

Well my noobish has finally wore off and everything did get completed (approved for SSL @60 months).

The auto-pay was discontinued in exchange for manual payments and the balance was summarily cropped to 7%.

Just waiting for new scores to show up with lenders who offer them monthly to determine what and how much of a change occurred.

Actually painless and they seem like really helpful friendly folks there.