topic EX dropped 36 pts from paying off my car in Understanding FICO® Scoring

EX dropped 36 pts from paying off my car

Anonymous — Thu, 03 Mar 2016 14:59:45 GMT

Well, that's frustrating. I subrscribe to CreditCheckTotal through EX and check my report every day. Yesterday I was up to 752 after having been as low as 659 in August. I had only $116 remaining on my car loan from 2013 so I went ahead and paid of that last bit. My EX score instantly droped to 716, with one of the factors saying "No non-mortgage installment loan, you may not be able to manage a variety of credit accounts". **bleep**??? Not only was I able to manage that type of loan, I paid it off successfully with no lates!!

I guess my best option is to take out a small low-interest unsecured personal loan to 'show I can manage a variety of credit accounts'. I realize that's how FICO scoring works -- it just seems pretty stupid to me.

Re: EX dropped 36 pts from paying off my car

Gmood1 — Thu, 03 Mar 2016 15:55:47 GMT

This is the only reason I'm still paying on my vehicle. I could have paid it off 2 years ago. Lol

Re: EX dropped 36 pts from paying off my car

Revelate — Thu, 03 Mar 2016 16:06:02 GMT

Heh, at least you have options .

I was all nice and pretty with optimized installment utilization for FICO 8 / 98, and got my mortgage, and poof: no way to recover those lost points anytime soon short of coughing up ~200k (um... no) and would only be 6 or so points back if I get to the 80% line in another 2.5 years, but admittedly I'll absolutely be rebucketed by that point so maybe I'll get more back than that on my file.

Re: EX dropped 36 pts from paying off my car

Anonymous — Fri, 04 Mar 2016 02:11:45 GMT

I feel your pain. My EX took a 33 point dump when my installment loan reported paid.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Fri, 04 Mar 2016 02:39:49 GMT

@Anonymous wrote:
Well, that's frustrating. I subrscribe to CreditCheckTotal through EX and check my report every day. Yesterday I was up to 752 after having been as low as 659 in August. I had only $116 remaining on my car loan from 2013 so I went ahead and paid of that last bit. My EX score instantly droped to 716, with one of the factors saying "No non-mortgage installment loan, you may not be able to manage a variety of credit accounts". **bleep**??? Not only was I able to manage that type of loan, I paid it off successfully with no lates!!

I guess my best option is to take out a small low-interest unsecured personal loan to 'show I can manage a variety of credit accounts'. I realize that's how FICO scoring works -- it just seems pretty stupid to me.

It's very stupid. When will they figure out that paying off a loan is a good thing?

Re: EX dropped 36 pts from paying off my car

Anonymous — Thu, 02 Jun 2016 07:43:01 GMT

I just refinanced a luxury vehicle loan on a loan I had that was 80% paid off a little over three weeks ago because I heard all the horror stories on MF about people losing 20-50 points once they paid off a car loan.

That worried me a lot since I have no other installment loans (no mortgage until next year) so I refinanced at 2.09% on a 3-year loan that will only cost me about $500 in TOTAL interest over the life of the loan.

But the new credit union I used still hasn't reported my new car loan or PLOC to any of the credit bureaus. Like I thought would happen RBFCU on Experian shows my old vehicle loan now paid off and closed.

I took a freaking 21 point hit on Experian!

HULK SMASH!

You pay on a loan for years while never missing a payment or being late. Then you pay off the loan like you're suppose to and all the credit bureaus then proceed to destroy your credit scores.

How is this crap legal?

The corporation owned America wants everyone to always stay in debt to someone and work for "The MAN."

Now my hope is once the new car loan reports I get back most of those points. Anyone have something like this happen in between refinanced car loans?

Re: EX dropped 36 pts from paying off my car

RonM21 — Thu, 02 Jun 2016 09:33:01 GMT

It certainly can be frustrating. I'm trying to avoid this before this time next year. My auto, and random installment loans will be paid off. I know I'll be getting a new vehicle though, and I'm not sure if I need to get another small loan.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Thu, 02 Jun 2016 11:37:52 GMT

@Anonymous wrote:
Well, that's frustrating. I subrscribe to CreditCheckTotal through EX and check my report every day. Yesterday I was up to 752 after having been as low as 659 in August. I had only $116 remaining on my car loan from 2013 so I went ahead and paid of that last bit. My EX score instantly droped to 716, with one of the factors saying "No non-mortgage installment loan, you may not be able to manage a variety of credit accounts". **bleep**??? Not only was I able to manage that type of loan, I paid it off successfully with no lates!!

I guess my best option is to take out a small low-interest unsecured personal loan to 'show I can manage a variety of credit accounts'. I realize that's how FICO scoring works -- it just seems pretty stupid to me.

It seems pretty stupid to me.

You're right about taking out a small low interest loan to get the points back, but don't do it as an unsecured loan and don't do it just anywhere, because you don't want an inquiry and you want to make it sure it reports right.

The tried and true method I'm aware of is to take out a $500+ savings account with Alliant Fedl Credit Union, take out a $500 share secured loan with 48 month or 50 month duration, either decline or remove autopay, after the loan reports, pay it down to $45 or so, pay around $1 a month for the duration of the loan.

Re: EX dropped 36 pts from paying off my car

Anonymous — Thu, 02 Jun 2016 12:41:13 GMT

OP, while I can certainly understand your frustration, FICO scoring needs to see a current installment loan to give you points for it. I've paid off 6 installment loans successfully with no lates and would still get the same point drop if I didn't have another current one. The rationale is that even though you've successfully paid off installment loans in the past, without having a current one there's no way to prove that you're able to do so today. FICO doesn't know if you've lost your income or something else dramatically changed in your life that would prevent you from being able to meet the terms of a new loan if you were to get one today. That's just how it works. Like others have mentioned above, the simple work around is to get another simple active installment loan going and you'll get those points right back once it reports.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Thu, 02 Jun 2016 15:24:07 GMT

@Anonymous wrote:
OP, while I can certainly understand your frustration, FICO scoring needs to see a current installment loan to give you points for it. I've paid off 6 installment loans successfully with no lates and would still get the same point drop if I didn't have another current one. The rationale is that even though you've successfully paid off installment loans in the past, without having a current one there's no way to prove that you're able to do so today. FICO doesn't know if you've lost your income or something else dramatically changed in your life that would prevent you from being able to meet the terms of a new loan if you were to get one today. That's just how it works. Like others have mentioned above, the simple work around is to get another simple active installment loan going and you'll get those points right back once it reports.

It is rumored that FICO 9 is going to reduce the scoring distinction between open and closed installment loans; unfortunately no one actually uses FICO 9 yet, to the best of my knowledge.

Re: EX dropped 36 pts from paying off my car

Revelate — Thu, 02 Jun 2016 15:27:12 GMT

@SouthJamaica wrote:
@Anonymous wrote:
OP, while I can certainly understand your frustration, FICO scoring needs to see a current installment loan to give you points for it. I've paid off 6 installment loans successfully with no lates and would still get the same point drop if I didn't have another current one. The rationale is that even though you've successfully paid off installment loans in the past, without having a current one there's no way to prove that you're able to do so today. FICO doesn't know if you've lost your income or something else dramatically changed in your life that would prevent you from being able to meet the terms of a new loan if you were to get one today. That's just how it works. Like others have mentioned above, the simple work around is to get another simple active installment loan going and you'll get those points right back once it reports.
It is rumored that FICO 9 is going to reduce the scoring distinction between open and closed installment loans; unfortunately no one actually uses FICO 9 yet, to the best of my knowledge.

Since that started when I was gone, any idea what supports that rumor? Unfortunately I can't test installment utilization anymore so I can't go try to test that myself.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Thu, 02 Jun 2016 15:37:03 GMT

@Revelate wrote:
@SouthJamaica wrote:
@Anonymous wrote:
OP, while I can certainly understand your frustration, FICO scoring needs to see a current installment loan to give you points for it. I've paid off 6 installment loans successfully with no lates and would still get the same point drop if I didn't have another current one. The rationale is that even though you've successfully paid off installment loans in the past, without having a current one there's no way to prove that you're able to do so today. FICO doesn't know if you've lost your income or something else dramatically changed in your life that would prevent you from being able to meet the terms of a new loan if you were to get one today. That's just how it works. Like others have mentioned above, the simple work around is to get another simple active installment loan going and you'll get those points right back once it reports.
It is rumored that FICO 9 is going to reduce the scoring distinction between open and closed installment loans; unfortunately no one actually uses FICO 9 yet, to the best of my knowledge.
Since that started when I was gone, any idea what supports that rumor? Unfortunately I can't test installment utilization anymore so I can't go try to test that myself.

No, that's why it's just a rumor.

I first heard it here and found that it resonated with my profile.

Thanks to your teachings I now have not one but two installment loans, so I will be testing the "rumor" as I go along.

Re: EX dropped 36 pts from paying off my car

Revelate — Thu, 02 Jun 2016 15:44:42 GMT

@SouthJamaica wrote:
@Revelate wrote:
@SouthJamaica wrote:
@Anonymous wrote:
OP, while I can certainly understand your frustration, FICO scoring needs to see a current installment loan to give you points for it. I've paid off 6 installment loans successfully with no lates and would still get the same point drop if I didn't have another current one. The rationale is that even though you've successfully paid off installment loans in the past, without having a current one there's no way to prove that you're able to do so today. FICO doesn't know if you've lost your income or something else dramatically changed in your life that would prevent you from being able to meet the terms of a new loan if you were to get one today. That's just how it works. Like others have mentioned above, the simple work around is to get another simple active installment loan going and you'll get those points right back once it reports.
It is rumored that FICO 9 is going to reduce the scoring distinction between open and closed installment loans; unfortunately no one actually uses FICO 9 yet, to the best of my knowledge.
Since that started when I was gone, any idea what supports that rumor? Unfortunately I can't test installment utilization anymore so I can't go try to test that myself.
No, that's why it's just a rumor.

I first heard it here and found that it resonated with my profile.

Thanks to your teachings I now have not one but two installment loans, so I will be testing the "rumor" as I go along.

Oh yeah that was a theory and conjecture thread, though based on horribly limited data the balance reporting one might be accurate.

Appreciate your datapoint testing on this one!

Re: EX dropped 36 pts from paying off my car

Anonymous — Sun, 05 Jun 2016 07:45:36 GMT

**UPDATE""

My car refi horror story just got worse.

Not only did I not get back a single Experian FICO point once my new refi car loan posted at 2am tonight, I lost another 24pts! (BLEEP BLEEP BLEEP!)

I've lost a crazy 45pts off my Experian FICO 08 credit score (CCT) in the last three days since I paid off and refinanced the same vehicle.

Is the moral of the story to never pay off an installment loan in your life or FICO will coldly gut your credit scores like a fat little piggy at a slaughter house?

This is nuts.

I had a 60-month installment vehicle loan with RBFCU with perfect payment history for 59 months. Then to avoid losing 25-50pts like all the installment payoff horror stories I read on here I refinanced the loan with another credit union on month 59 for about half of what the original loan amount was for to make sure that I wouldn't get credit score prison rap*d by FICO.

Re: EX dropped 36 pts from paying off my car

Anonymous — Sun, 05 Jun 2016 08:12:43 GMT

Maybe your point loss is temporary because of the refinance... additional new account, lower AAoA, inquiry, etc. I would think that would go away quickly and you'll also get back your points for having an installement loan reporting again.

Re: EX dropped 36 pts from paying off my car

Anonymous — Sun, 05 Jun 2016 08:17:38 GMT

I only went from 6.8 years to 5.9 years in AAOA and I only have TWO inquiries in the last 47 MONTHS on Experian!

My new vehicle installment loan IS reporting again on Experian and it went down 24 MORE points once it reported like my previous post stated.

Re: EX dropped 36 pts from paying off my car

Gmood1 — Sun, 05 Jun 2016 12:22:41 GMT

Wow that sucks credit luv! PenFed posted one auto loan paid off and a new one at the same time last month. My point loss was minimal. Though I still didn't like watching my EQ score drop 7 points. Now waiting on another auto loan from PenFed and a secure loan from Alliant to report. Hopefully the score will level off and not free fall. It really does suck the way the system works. When my mortgage transferred to another lender, I took a hit on that one as well.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Sun, 05 Jun 2016 15:06:47 GMT

@Anonymous wrote:
**UPDATE""

My car refi horror story just got worse.

Not only did I not get back a single Experian FICO point once my new refi car loan posted at 2am tonight, I lost another 24pts! (BLEEP BLEEP BLEEP!)

I've lost a crazy 45pts off my Experian FICO 08 credit score (CCT) in the last three days since I paid off and refinanced the same vehicle.

Is the moral of the story to never pay off an installment loan in your life or FICO will coldly gut your credit scores like a fat little piggy at a slaughter house?

This is nuts.

I had a 60-month installment vehicle loan with RBFCU with perfect payment history for 59 months. Then to avoid losing 25-50pts like all the installment payoff horror stories I read on here I refinanced the loan with another credit union on month 59 for about half of what the original loan amount was for to make sure that I wouldn't get credit score prison rap*d by FICO.

If you've lost 60 points from refinancing (36 from paying off, 24 from the new loan), you'll probably get them all back.... over time.... as you pay the new loan down.

Once you get it to 9% of the original amount of the loan, you'll probably be even with where you are today, all other things being equal.

I guess the "moral of the story" is try to maintain your overall installment loan utilization at 1 to 9% when you need a good score.

IMHO FICO's penalizing for paying off a loan is irrational in the extreme, but it's part of the "moral of the story" that if you want to keep the FICO gods happy you need to have at least one open installment loan, preferably a mostly-paid-down one. It's rumored that FICO 9 will reduce that penalty, but time will tell.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Sun, 05 Jun 2016 14:59:19 GMT

@Gmood1 wrote:
Wow that sucks credit luv! PenFed posted one auto loan paid off and a new one at the same time last month. My point loss was minimal. Though I still didn't like watching my EQ score drop 7 points. Now waiting on another auto loan from PenFed and a secure loan from Alliant to report. Hopefully the score will level off and not free fall. It really does suck the way the system works. When my mortgage transferred to another lender, I took a hit on that one as well.

I'm guessing it was buffered for you because you had one or more other installment loans open at the time, such as the mortgage. I recently learned from Revelate that it's only the overall utilization they look at.

Re: EX dropped 36 pts from paying off my car

SouthJamaica — Sun, 05 Jun 2016 15:02:58 GMT

@Anonymous wrote:
Maybe your point loss is temporary because of the refinance... additional new account, lower AAoA, inquiry, etc. I would think that would go away quickly and you'll also get back your points for having an installement loan reporting again.

That's not it. OP's point loss is

-36 points due to the removal of an installment loan from credit mix

-24 points due to the reporting of car with 100% utilization