topic Re: Payed down student loans score went down in Understanding FICO® Scoring

Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 06:53:07 GMT

I paid down student loans by $65,000. I still owe 200k, but my score dropped 24 pts across all 3 bureaus....nothing else in my report changed
....

Any ideas??

Re: Payed down student loans score went down

SouthJamaica — Tue, 13 Dec 2016 10:44:36 GMT

@Anonymous wrote:
I paid down student loans by $65,000. I still owe 200k, but my score dropped 24 pts across all 3 bureaus....nothing else in my report changed
....

Any ideas??

If you paid one loan off to zero, that took it out of the open-installment-loan-utilization-percentage equation which is a big scoring factor in FICO 8.

Re: Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 12:40:23 GMT

We would have to know what his open installment loans are in terms of current/original balances to really give an answer here. I wouldn't think a utilization change would account for a drop that great. Generally only paying off all open installment loans results in such a drop. OP if you can get back to us listing what your open installment loans were prior to the $65k paydown (balance / original balance) and after the paydown we can dig a little deeper on this.

Re: Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 14:39:33 GMT

Sure...

I have 3 installment loans

Honda. 19,000/22,000
Honda. 13,000/22,600
Student loans. 260,000/200,000-->200,00/200,00

Re: Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 14:56:56 GMT

So you paid down the student loan balance from $260k to $200k? That means the loan is still open then?

Based on that information, there is no way that making that payment should have dropped your scores.

Re: Payed down student loans score went down

SouthJamaica — Tue, 13 Dec 2016 15:04:34 GMT

@Anonymous wrote:
Sure...

I have 3 installment loans

Honda. 19,000/22,000
Honda. 13,000/22,600
Student loans. 260,000/200,000-->200,00/200,00

You need to break the student loans down into separate loans rather than lump them together as though they are one.

Once you pay a loan down to zero, it's original balance is taken out of the denominator for computing the open installment loan utilization percentage.

Re: Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 15:13:30 GMT

Yes it is still open. Which is why I'm confused. I could see no change in score.....but paying down should cause score decreease....

It's is how I listed it. It's one loan, so you shouldn't separate and count them as seperate...would Make no sense

Re: Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 15:13:56 GMT

*should not cause decrease

Re: Payed down student loans score went down

Revelate — Tue, 13 Dec 2016 15:15:29 GMT

@Anonymous wrote:
*should not cause decrease

You wrote 260k/200k; were the loans deferred or in some other state, or did you mean 200/260k?

Re: Payed down student loans score went down

newhis — Tue, 13 Dec 2016 15:28:58 GMT

@Anonymous wrote:
Sure...

I have 3 installment loans

Honda. 19,000/22,000
Honda. 13,000/22,600
Student loans. 260,000/200,000-->200,00/200,00

So your student loan is for 200,000 and you had a 260,000 balance, and now you paid 60,000 on it and now is 200,000/200,000?

Maybe your student loan was not included in your score, and now it is?

Re: Payed down student loans score went down

Anonymous — Tue, 13 Dec 2016 15:57:11 GMT

Yes that is correct. No it was includes in my score. Cuz when the interest capitalized and went into repayment my scor3s dropped -24 pts...