topic Re: Paid off car loan, score dropped 80 points! in Understanding FICO® Scoring

Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 14:00:01 GMT

I've been really focusing on paying everything down lately to get my utilization under 30% (it's at 38% right noow). I recently paid the balance on my auto loan ($1900), paying it off about 6 months early, to free up the $300 to put towards revolving debt. My score dropped 80 points! From 679 to 592! The comments on my auto loan are "closed" rather than paid in full, do you guys think this is why I had such a large drop? The only changes to my report are decreased balances, so I'm not sure what else it could be!

Re: Paid off car loan, score dropped 80 points!

thornback — Thu, 07 Mar 2019 14:09:44 GMT

Hi Angiel, welcome to the forums!

Was the auto your only installment loan? If so, then paying it off and having it closed negatively affected your 'mix of credit', so you've been penalized. You would regain those lost points by adding a new installment - though I wouldn't recommend obtaining a loan you don't need just for the sake of scoring.

However, 80 points seems like a lot for closed loan / credit mix penalty -- are the scores you are monitoring FICO scores? Where are you getting them?

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 14:11:37 GMT

If that was your only installment loan, then that’s why your score dropped. FICO likes an open installment loan reporting less than 8.9% utilization.

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 14:14:47 GMT

I have student loans as well that are installment loans. The scores I checked were from credit karma, capital one, citi, american express, and discover.

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 14:15:01 GMT

Where are you getting your scores from?

Was this your only open installment account? No other loans, car leases, etc?

If it was your only open loan, can you tell us the original amount of the loan and the balance just before payoff?

If you can tell us all of these things, we can likely shed some light on the score drop.

PS. I am also curious to hear what the interest rate was on the car loan and what the interest rate was on the credit cards that you are working to pay off.

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 14:20:33 GMT

Looks like many of us asked some of the same questions at the same time.

Can you list for us all your loans, including the recently paid off auto loan? Like this?

Loan 1. Balance = _____ Orginal Amount = ____

Loan 2. Balance = _____ Orginal Amount = ____

Loan 3. Balance = _____ Orginal Amount = ____

etc.

For the auto loan, tell us the balance just before payoff.

As far as your scores from Karma, you should ignore those since they are based on the Vantage model and no lender or CC issuer uses those to make decisions. Some of the other places you mentioned getting your scores from might also be giving you Vantage scores and those also should be ignored.

Re: Paid off car loan, score dropped 80 points!

thornback — Thu, 07 Mar 2019 14:22:11 GMT

@Anonymous wrote:
I have student loans as well that are installment loans. The scores I checked were from credit karma, capital one, citi, american express, and discover.

OK -- Credit Karma & Cap One scores are not FICO, so ignore those.

American Express offers two scores - a Transunion Vantage score and an Experian FICO 8 score -- which one are you looking at?

Discover: if viewing from your account as a card holder, then that is a Transunion FICO 8 score. If using Discover's free credit score site, then it is an Experian FICO 8 score.

Citi offers Equifax Bankcard enhanced version of FICO 8 (which is different from FICO 8 Classic).

So.... considering only your FICO 8 scores, how much did your scores drop? Was it still ~80 points?

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 15:02:54 GMT

It sounds like the OP has open student loans, so the closure of this auto loan shouldn't have ruined their credit mix.

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 17:04:00 GMT

Yes - all of the scores from various places are within 4/5 points of each other.

The original balance was $15,000, I paid the remaining $1,900.

I have other installment loans:

Fed Loan: Orig. $32,220 Current : $47,714

Fed Loan 2: 20,500 26,094

Fed Loan 3: 20,500 25,519

Fed Loan 4: 20,500 22,608

Fed Loan 5: 20,500 21,714

Navient: 3,500 2,154

Navient: 3,000 1,721

Navient: 3,061 0

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 17:46:02 GMT

@Anonymous wrote:
Yes - all of the scores from various places are within 4/5 points of each other.

Just be sure to ignore the non-FICO scores. They seem to be within a few points of your FICO scores currently, which may cause you to [wrongly] believe that this will then always be the case... and if you saw a (say) 50 point drop to one of your non-FICO scores then it would mean your FICO scores would also drop around 50 points. Be aware though that this is not true at all and no direct relationship/comparison can be formed between FICO scores and non-FICO scores.

Re: Paid off car loan, score dropped 80 points!

Anonymous — Thu, 07 Mar 2019 18:19:07 GMT

I am surprised that our OP has received new score updates from all those sources so very fast. In the case of Karma it is not surprising. The OP can go in and pull fresh scores instantly as long as she hasn't gotten any in the last six days. But the other sources (especially credit cards) typically take a month or even more to update new scores.

Regardless, if I were the OP, I would sign up for the $1 trial at Credit Check Total. That will give our OP true FICO scores using the same model (FICO 8 Classic) across all three bureaus drawn at the exact same point in time.

Re: Paid off car loan, score dropped 80 points!

FlaDude — Thu, 07 Mar 2019 19:28:22 GMT

@Anonymous wrote:
Just be sure to ignore the non-FICO scores. They seem to be within a few points of your FICO scores currently, which may cause you to [wrongly] believe that this will then always be the case... and if you saw a (say) 50 point drop to one of your non-FICO scores then it would mean your FICO scores would also drop around 50 points. Be aware though that this is not true at all and no direct relationship/comparison can be formed between FICO scores and non-FICO scores.

Very true. My experience is that Vantage scores are much more sensitive to utilization than FICO. Mine are pretty close now with overall UTI around 10% and no cards over 40%, but when I was at 80% overall and some cards close to 100%, the Vantage scores were 80-100 points lower than FICO.

Re: Paid off car loan, score dropped 80 points!

SouthJamaica — Thu, 07 Mar 2019 20:23:29 GMT

@Anonymous wrote:
Yes - all of the scores from various places are within 4/5 points of each other.

The original balance was $15,000, I paid the remaining $1,900.

I have other installment loans:
Fed Loan: Orig. $32,220 Current : $47,714
Fed Loan 2: 20,500 26,094
Fed Loan 3: 20,500 25,519
Fed Loan 4: 20,500 22,608
Fed Loan 5: 20,500 21,714
Navient: 3,500 2,154
Navient: 3,000 1,721
Navient: 3,061 0

Since you owe more on many of your loans than the original loan amount, the mostly paid down auto loan was probably boosting your score somewhat. Nevertheless I don't think any FICO score would have received such a drastic point loss from that loan payoff.

Accordingly, you should tell us exactly what reports and scores you are looking at.