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New Member
scanlin
Posts: 2
Registered: ‎02-09-2008
0

installment loan ages off and score drops 27 points

Last week I got a full copy of my credit report. Today I got a ScoreWatch notice that my score had dropped 27 points (708 -> 681). I logged in and got another full copy of my report. The only difference between the two reports is that an old (10 years) paid-off installment loan had aged off the report. My score dropped because of the absense of this previously paid-off 'good' loan.

 

My situation:

-- 23 year credit history, zero negatives

-- 14 accounts, average age = 10 years

-- 9 accounts have balances:

  -- 4 installment (1st mort, HELOC w/large balance, 2 unsecured loans used for business)

  -- 5 revolving (too many, I know)

 

The balances and CLs on all 14 accounts are identical for the 681 score and 708 score. The only difference between the two credit reports (which were taken 5 days apart from each other) is that the higher score (708) report contained a 15th account, which was a 10 year old $430K installment loan (mortgage) that had been paid off (last activity 10 years ago). The lower score (681) report did not have this paid off installment loan (because that account just clicked over to 10+ years old and so aged off the report).

 

Reasons I can think of for a 27 point drop:

(1) I no longer have any paid-off installment loans (the 4 remaining installment loans all have balances)

(2) My average account age went down with the removal of a 10 year account (although the "Understanding Your Score" section lists "average age" of 10 years for both the 681 and 708 scores)

(3) The large size ($430K) of the paid off installment loan was helping me; now it's gone

(4) I'm now violating a % of accounts that have balances rule that I wasn't before (9 out of 14, vs 9 out of 15)

(5) I got re-bracketed (is there a "has never completely paid off a mortgage" category?)

 

Anyone else had a 27 point drop caused by a good account aging off your report?

 

One of my 4 current installment loans has a small balance ($4K) and I'm going to pay it off to see what happens. That will change my ratio of 'accounts with balances' from '9 out of 14' to '8 out of 14', as well as put a paid-off installment loan on my report.


Other suggestions or ideas?

Regular Contributor
hateAshbury
Posts: 131
Registered: ‎11-14-2011
0

Re: installment loan ages off and score drops 27 points

my student loans recently were transferred from "Servicer A" to "Servicer B". For a few months, none of my loans reported, and I had a 10-point drop, although everything else in my credit profile -- AAoA, utilization, payment history -- improved. I expect that when Servicer B starts reporting, I'll get that 10 points back, and maybe an additional point or two.


Starting Score: 653 (11/1/2011 TransUnion)
Current Score: 719 (5/3/2012 TransUnion) 572 (3/21/2012 Equifax) 762 (4/14/12 VantageScore)
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Regular Contributor
MustangSaluki
Posts: 203
Registered: ‎07-07-2008
0

Re: installment loan ages off and score drops 27 points

Something doesn't add up. With that high AAoA and only 5 revolvers (5 is not too many by any means) your scores should be really, north of 800. Are you carrying large balances on the revolvers and are they all relatively new? 

 

Pay off the four highest revolving balances and let around 2-3% utilization report on the one last one with highest credit limit. My guess is you are getting dinged on the % utilization side of the house. 

New Member
scanlin
Posts: 2
Registered: ‎02-09-2008
0

Re: installment loan ages off and score drops 27 points

Yes, I have balances and high util %s. I know I need to reduce the amount of overall debt. but the point of my posting was that the ONLY change between the 681 and 708 reports which were taken 5 days apart from each other is that the 15th account is on the higher scoring report but had aged off of the lower scoring report. We can attribute all of the difference to that single change. Or else I tripped some ratio, as mentioned in the original post, by not having that 10 year old paid off mortgage account any longer.

New Visitor
GerberDaisy
Posts: 1
Registered: ‎08-21-2013
0

Re: installment loan ages off and score drops 27 points

I would not recommend it. I am two weeks away from closing on my home mortgage and paid off a 2700.00 installment loan to increase credit score. 

 

Guess What? Score fell 34 points. Long story short, I AM SCREWED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! My gusess is I lost the benefit of having a varity of credit and closed accounts are not good. I should left a balance of 100.00. Until I closed. Oh well there goes my dream home I have been building for the last 8 months.


 

 


scanlin wrote:

Last week I got a full copy of my credit report. Today I got a ScoreWatch notice that my score had dropped 27 points (708 -> 681). I logged in and got another full copy of my report. The only difference between the two reports is that an old (10 years) paid-off installment loan had aged off the report. My score dropped because of the absense of this previously paid-off 'good' loan.

 

My situation:

-- 23 year credit history, zero negatives

-- 14 accounts, average age = 10 years

-- 9 accounts have balances:

  -- 4 installment (1st mort, HELOC w/large balance, 2 unsecured loans used for business)

  -- 5 revolving (too many, I know)

 

The balances and CLs on all 14 accounts are identical for the 681 score and 708 score. The only difference between the two credit reports (which were taken 5 days apart from each other) is that the higher score (708) report contained a 15th account, which was a 10 year old $430K installment loan (mortgage) that had been paid off (last activity 10 years ago). The lower score (681) report did not have this paid off installment loan (because that account just clicked over to 10+ years old and so aged off the report).

 

Reasons I can think of for a 27 point drop:

(1) I no longer have any paid-off installment loans (the 4 remaining installment loans all have balances)

(2) My average account age went down with the removal of a 10 year account (although the "Understanding Your Score" section lists "average age" of 10 years for both the 681 and 708 scores)

(3) The large size ($430K) of the paid off installment loan was helping me; now it's gone

(4) I'm now violating a % of accounts that have balances rule that I wasn't before (9 out of 14, vs 9 out of 15)

(5) I got re-bracketed (is there a "has never completely paid off a mortgage" category?)

 

Anyone else had a 27 point drop caused by a good account aging off your report?

 

One of my 4 current installment loans has a small balance ($4K) and I'm going to pay it off to see what happens. That will change my ratio of 'accounts with balances' from '9 out of 14' to '8 out of 14', as well as put a paid-off installment loan on my report.


Other suggestions

 

New Visitor
FICOWolf
Posts: 2
Registered: ‎11-07-2013
0

Re: installment loan ages off and score drops 27 points

I paid off an Installment loan and my score dropped 16 points from 723 to 707.  Total Bummer, but at least the loan is paid off. I believe the "closed account" was the biggest factor.


GerberDaisy wrote:

I would not recommend it. I am two weeks away from closing on my home mortgage and paid off a 2700.00 installment loan to increase credit score. 

 

Guess What? Score fell 34 points. Long story short, I AM SCREWED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! My gusess is I lost the benefit of having a varity of credit and closed accounts are not good. I should left a balance of 100.00. Until I closed. Oh well there goes my dream home I have been building for the last 8 months.


 

 


scanlin wrote:

Last week I got a full copy of my credit report. Today I got a ScoreWatch notice that my score had dropped 27 points (708 -> 681). I logged in and got another full copy of my report. The only difference between the two reports is that an old (10 years) paid-off installment loan had aged off the report. My score dropped because of the absense of this previously paid-off 'good' loan.

 

My situation:

-- 23 year credit history, zero negatives

-- 14 accounts, average age = 10 years

-- 9 accounts have balances:

  -- 4 installment (1st mort, HELOC w/large balance, 2 unsecured loans used for business)

  -- 5 revolving (too many, I know)

 

The balances and CLs on all 14 accounts are identical for the 681 score and 708 score. The only difference between the two credit reports (which were taken 5 days apart from each other) is that the higher score (708) report contained a 15th account, which was a 10 year old $430K installment loan (mortgage) that had been paid off (last activity 10 years ago). The lower score (681) report did not have this paid off installment loan (because that account just clicked over to 10+ years old and so aged off the report).

 

Reasons I can think of for a 27 point drop:

(1) I no longer have any paid-off installment loans (the 4 remaining installment loans all have balances)

(2) My average account age went down with the removal of a 10 year account (although the "Understanding Your Score" section lists "average age" of 10 years for both the 681 and 708 scores)

(3) The large size ($430K) of the paid off installment loan was helping me; now it's gone

(4) I'm now violating a % of accounts that have balances rule that I wasn't before (9 out of 14, vs 9 out of 15)

(5) I got re-bracketed (is there a "has never completely paid off a mortgage" category?)

 

Anyone else had a 27 point drop caused by a good account aging off your report?

 

One of my 4 current installment loans has a small balance ($4K) and I'm going to pay it off to see what happens. That will change my ratio of 'accounts with balances' from '9 out of 14' to '8 out of 14', as well as put a paid-off installment loan on my report.


Other suggestions

 


 

Established Contributor
FutureBillionaire
Posts: 650
Registered: ‎12-12-2012
0

Re: installment loan ages off and score drops 27 points

My Experian and Transunion scores are both 770 or higher.  My Equifax is at 730 primarily to an account falling off of my report.  It hurt my AAoA pretty badly and length of credit history.  I've definitely learned that it is wise to keep a low balance on one if I need to apply for something instead of paying it off.

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Super Contributor
enharu
Posts: 7,132
Registered: ‎02-27-2013
0

Re: installment loan ages off and score drops 27 points

Credit score is just one of the many things lenders look at. If you can pay off the loan, pay it off. There's little to no difference between a 730 and 770 score. Your income and actual contents of your CR are going to be bigger determinants of CL, APR, and approval odds once you are past 700-720, depending on the lender and what type of loan / credit you are applying for. For example, anything above 720 is considered tier 1 for Lexus financing / lease.

It makes little to no sense to be forking out interest fees just so one can squeeze a few more points out of their CS.
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USF813
Posts: 376
Registered: ‎06-04-2013
0

Re: installment loan ages off and score drops 27 points

This thread frightens me. My auto loan is scheduled to drop off April 2014!

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Established Member
mrmichaelscott
Posts: 22
Registered: ‎12-02-2012
0

Re: installment loan ages off and score drops 27 points

IMO i know it seems alot of points... but for established credit history such as yours points it really doesnt mean much... I mean it doesn't take away your good credit status... it means absolutely nothing... it's not like 5 days ago you would have gotten approved for a credit card at x amount now you won't get approved or it would be a -x amount bc your score is now 27 points lower... I bet in a couple weeks or month it will bounce back to normal. don't lose sleep over it... it sounded like you're worried but you're fine


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