no change in FICO score despite significant pay down

[synmgr]

Originally this was an auto loan for over $40M, yet when the final payment was made my FICO score did not change. Why?

Account opened: 7/2008  

Description:  Closed or Paid Account/Zero Balance Auto loan

	Previously reported	Newly reported
Balance:	$741
Past due:	$0	$0
Status:	Pays account as agreed	Pays account as agreed
Last activity:	6/1/2013	7/1/2013
Description:	Auto loan	Closed or Paid Account/Zero Balance Auto loan

[elvigy]

I've read that installment loans usually don't have much impact on your FICO score but I'll let someone knowledgeable answer that. I just wanted to say, nice car! $40 million?

Just to be clear-the installment loan does help with mix of credit (and possibly the average age of accounts?) but that would have already been factored into your score. Paying it off wouldn't have much impact after that.

[DaBears]

Paying off an installment loan can actually lower your score cause it affects you AAoA. Also depends also what else you have on your credit report.

[synmgr]

OK

Now please explain the following:

    When I established a new credit account with Brooks Brothers my score dropped 25 points.

    When I received the first monthly statement, a month later, I paid the entire balance off in full but my FICO score did  not change.

[guiness56]

Your score going up or down is based on your entire credit profile.  What is on your report?  Any negatives?  What is your score?

Those with higher scores tend to lose points when a TL is added.

FICO doesn't like to see all revolving at a 0 balance.  If that is the case, leave a small balance on one of the CC.

As for installments, they carry very little weight on your score.  If it was your only installment and you paid it off your score could have dropped for lack of credit mix.

All OC accounts, open or closed are factored into your AAoA

[elvigy]

Just from my own example, my FICO with Equifax was 764. When I applied with Chase for a credit card, my score dropped 11 points just because of the inquiry (which is kind of unusual since most posts I've seen say it normally would drop 4 or 5 points). Anyway, I expect it to drop even more once the new credit card is added to my report because it will reduce the average age of my accounts since it's so new. It will take some time for it to recover as I gain history with it for paying on time, not carrying much or any of a balance and the account ages.

I expect it will take at least 6 months to a year before I'm back to 764, though I'm still new at this scoring stuff and it might rebound faster or slower. The point being, it's way more complicated than just getting a card and making a payment for one or two months.

I hope that helps. Keep charging and paying and you should be OK.

[synmgr]

Thanks to all who have responded. Your comments have been very helpfull.

The last question for the day is the following:

  The same credit card debit balance was double counted on the same day that my score dropped. Why did the FICO computer algorithm double count it?

  Can I expect that to happen again?

[guiness56]

Can you clarify what you mean?  Is it something from SW?

[synmgr]

2 reports of account balance changes        

ELAN FINANCIAL SERVICES    (XXXXXXXXXXXX)     New balance: $xx

Account opened: xx  Description: Credit card Amount in H/C column is credit limit     Previously reported Newly reported Account balance: $xx $xx You received this alert because this balance increase of $xx (xx% of previous balance) exceeded your alert limit of $xx. You can change the settings for this kind of alert here. Contact: ELAN FINANCIAL SERVICES, Cb Disputes, Saint Louis, MO, 631660108   •

ELAN FINANCIAL SERVICES (XXXXXXXXXXXX)     New balance: $xx

Account opened: xx    Description: Credit card Amount in H/C column is credit limit     Previously reported Newly reported Account balance: $xx $xx You received this alert because this balance increase of $xx (xx% of previous balance) exceeded your alert limit of xx%. You can change the settings for this kind of alert here. Contact: ELAN FINANCIAL SERVICES, Cb Disputes, MO, 631660108   •

How balance changes impact your score:

A balance increase on an account may lower your FICO® score.

A large balance on an account, or balances on many accounts, can be a sign that you may be having trouble paying back debts. Since your FICO® score measures the chances that you will pay back a debt, larger balances or balances on more accounts can lower your score.

"Maxing out" a credit card or other line of credit is when the balance on the account comes close to the account's credit limit. This can dramatically lower your FICO® score because it is often a sign of a consumer who desperately needs credit and may not be able to pay it back.

The drop in your FICO® score caused by a balance increase can be reversed by paying down the balance.

[guiness56]

Is this score watch?

If it is, it isn't really showing 2 accounts for the same things.  It has to do with the way the alerts are done.