Why?

[vanillabean]

When a second credit card account reported a balance, my EQ dropped from 840 to 834. Ok.

When a third credit card account reported a balance, the score didn’t change, although dreaded dormant.

When a car loan was paid off, the score dropped from 834 to 809, although not the last open installment account as the report also has a small personal bank loan.

[Anonymous]

It sounds like, now that the car loan has been paid off, you have exactly one open installment loan -- a personal loan.  Right?  What percentage of it is paid off?

[vanillabean]

Somewhere in the 0-100% range. I have to get back to you on that one.

[Anonymous]

That was pretty funny.  It might be almost all paid off, or maybe almost none of it is paid off -- but you're not sure.  -)

Here's why I think that could matter.  Suppose your personal loan is for $1000 and you currently owe $805 on it.  Suppose your car loan was originally for $20,000 and the payments were for $400.  In the last three months of the life of the car loan, the total amount you owed on installment loans was roughly $1200 + $800 = $2000.  The total amount of the amount originally borrowed was $21,000.  Thus, in the last few months of the car loan, the percentage owed on your open installment loans was less than 10%.

When the car loan reported as closed, however, the paid-ratio on your open installment loans jumped up to more than 80%.

You lost all the FICO points you had for having paid off most of the original amount of all open loans.

That's a guess as to what happened.

[Thomas_Thumb]

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@Anonymous-own-fico wrote:

When a second credit card account reported a balance, my EQ dropped from 840 to 834. Ok.

When a third credit card account reported a balance, the score didn’t change, although dreaded dormant.

When a car loan was paid off, the score dropped from 834 to 809, although not the last open installment account as the report also has a small personal bank loan.

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Certainly appears like you crossed back above an aggregate installment loan threshold. I suspect the loan you paid off was the bulk of the total for the two combined. After all what is remaining is "a small" personal bank loan. With that gone, your total loan balance to loan amount likely spiked.

What was your combined loan balance % before the pay off and what is it now that the larget one no longer counts? Were you below 10% and now are you above 20%?

Note: Based on some recent data I have seen posted; there may be installment (ex mortgage) loan thresholds at 70% and 10%..

[vanillabean]

I am not opposed to the concept of installment loan utilization, albeit different from the better known credit card utilization. I also have a mortgage, which, like the small two year personal bank loan, started at new year.

[Anonymous]

Well, as Thom Thumb and I have suggested, the answer to your question ("Why?") is probably related to the installment loan utilization %.   We'd need to know the amount that the two loans were originally for, the amount owed on the car loan when it was paid off, and the amount owed now on the personal loan.  Then you just do the math to see what your % was before the payoff (including both loans) and the % now (personal loan only).

My guess is that when you do the math that will answer your question.

[Thomas_Thumb]

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@Anonymous-own-fico wrote:

I am not opposed to the concept of installment loan utilization, albeit different from the better known credit card utilization. I also have a mortgage, which, like the small two year personal bank loan, started at new year.

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Credit reports place a home mortgage in a different category than other installment loans. This indicates these two factors are modelled differently in scoring.

A high remaining balance vs original loan on a mortgage is likely NOT lumped in with the other installment loans from an aggregate perspective. Also, a high % remaining on a mortgage is typical and likely does not negatively impact score (to the same degree)/(in the same way) as other installment loans.

[vanillabean]

DW dropped 24 points from 836 to 812, just as I dropped 25 from 834 to 809, and she does not have the small personal bank loan. It is listed under installments, but appears to have made no difference in my scores.

[Thomas_Thumb]

Well since it impacted DW the same way, there goes that theory. 

That leaves two likely candidates remaining for the score drop:

1) You got dinged for closing out a car loan (others have reported this happening). Not sure how that works since last car loan I had was paid off in 1989.

2) Mortgage and installment loans are looked at together in aggregate and close out of the car loan put your overall balance remaining % above a threshold. 

It would be interesting to know the following:

1) % aggregate loan balance before car paid off, Balance (mortgage + car)/ Original Loan (mortgage+car)

2) % balance loan after car paid off, Balance (mortgage)/Original (mortgage)

The aggregate loan balance might come into play if you went from below 70% to above 70% or below 80% to above 80% depending on the actual threshold.