topic Re: 25 point drop! in Understanding FICO® Scoring

25 point drop!

Bonzoled — Fri, 29 May 2020 13:23:30 GMT

Morning friends

A quick question. Is it natural to have a 25 points drop (EXP) when you payout a Car Loan? Is it because

you diminish the number of accounts? I'd assume that less debt / higher scores :/

Thanks for your insight!

Re: 25 point drop!

Brian_Earl_Spilner — Fri, 29 May 2020 13:32:39 GMT

If it's your only installment loan, you're receiving a penalty for not having an optimal credit mix. Adding a new loan will get you some of those points back. Paying the loan down to below 8.9% will get you the rest.

Re: 25 point drop!

Bonzoled — Fri, 29 May 2020 13:43:23 GMT

Thanks for the info. I had 2 leases, and just renewed one, got rid of the other car.

Re: 25 point drop!

Anonymous — Mon, 15 Jun 2020 15:39:12 GMT

Actually it’s aggregate installment utilization not credit mix. But the advice is sound that once it's at 9% you'll get your points back.

Re: 25 point drop!

SouthJamaica — Mon, 15 Jun 2020 11:13:25 GMT

@Bonzoled wrote:
Thanks for the info. I had 2 leases, and just renewed one, got rid of the other car.

Then it could be that you had an increase in your aggregate installment utilization percentage, which caused some of your scores to drop.

When you get your remaining lease down to 9% of the original amount you'll see a corresponding spike in your scores.

BTW the dramatic drop and spike which occur in your FICO 8 and 9 scores usually do not occur on the older scoring models, such as the mortgage scores.