topic Re: Score drop with paid Auto but still have installments in Understanding FICO® Scoring

Score drop with paid Auto but still have installments

nyuphoto — Fri, 07 Aug 2020 19:51:26 GMT

Hello,

All 3 scores dropped 14-20 points when my auto was paid. However, I still have a mortgage and the NEW auto loan reported to all 3 CRA's BEFORE the trade-in was reported paid off. I understand that if it was my only installment loan I'd take a major hit but that's not the case. Any insight on this?

Re: Score drop with paid Auto but still have installments

nyuphoto — Fri, 07 Aug 2020 19:59:06 GMT

DP's:

1. Trade-in auto loan was from 9/2018 high balance of 40k and owed balance before pay off was 30k.Reported paid 8/7/2020

2. New auto loan is 41.5k. This loan reported before the payoff 8/1/2020. All 3 CRA's showed total owed in auto installments was 71k.

3. Mortgage is from 1/2020 for 199k high balance and roughly 197k owed.

Re: Score drop with paid Auto but still have installments

randomguy1 — Sat, 08 Aug 2020 01:08:11 GMT

I think you might want to calculate your aggregate utilization % before and after.

Re: Score drop with paid Auto but still have installments

nyuphoto — Sat, 08 Aug 2020 04:13:38 GMT

For installments:

96% --> 99% Aggregate Utilization (if the new auto loan was in fact counted)

95% --> 99% (if new auto loan not counted)

These include the mortgage.

Re: Score drop with paid Auto but still have installments

randomguy1 — Sat, 08 Aug 2020 04:39:35 GMT

@nyuphoto wrote:
For installments:
96% --> 99% Aggregate Utilization (if the new auto loan was in fact counted)

95% --> 99% (if new auto loan not counted)

These include the mortgage.

Was the trade in a loan?

are you including that in your aggregate numbers?

Re: Score drop with paid Auto but still have installments

nyuphoto — Sat, 08 Aug 2020 05:47:22 GMT

Yes the trade in was a loan. I owed 30k and original loan amount was 40k. Both scenarios include this in the aggregate amounts.

Re: Score drop with paid Auto but still have installments

SouthJamaica — Sat, 08 Aug 2020 15:19:08 GMT

@nyuphoto wrote:
Hello,
All 3 scores dropped 14-20 points when my auto was paid. However, I still have a mortgage and the NEW auto loan reported to all 3 CRA's BEFORE the trade-in was reported paid off. I understand that if it was my only installment loan I'd take a major hit but that's not the case. Any insight on this?

I don't see the mystery. You went from 2 barely paid off loans to 3 barely paid off loans in your reports. I would expect your credit scores to lose a bit as your debt load was seen to increase.

Re: Score drop with paid Auto but still have installments

nyuphoto — Sat, 08 Aug 2020 21:18:32 GMT

That's sounds nice on paper but according to Fico scoring 1 installment loan is needed to maximize scores. My installment loan aggregate utilization changed 3 maybe 4%. My aggregate revolver utilization is 1%. Help me understand how 4% change should be a no brainer in dropping double digit points when I replaced a paid off loan with another loan and total aggregate changed a mere 3%.

@SouthJamaica wrote:
@nyuphoto wrote:
Hello,
All 3 scores dropped 14-20 points when my auto was paid. However, I still have a mortgage and the NEW auto loan reported to all 3 CRA's BEFORE the trade-in was reported paid off. I understand that if it was my only installment loan I'd take a major hit but that's not the case. Any insight on this?
I don't see the mystery. You went from 2 barely paid off loans to 3 barely paid off loans in your reports. I would expect your credit scores to lose a bit as your debt load was seen to increase.

Re: Score drop with paid Auto but still have installments

nyuphoto — Sat, 08 Aug 2020 21:23:48 GMT

To be clear with data points:

I went from 2 loans to 3 loans and back to 2 loans. All within less than a week. I traded a car in and literally paid off a loan and replaced it with another loan.

Installment aggregate 97% to 99%.
Revolver aggregate 1%.

20 point drop in FICO 8.

Re: Score drop with paid Auto but still have installments

SouthJamaica — Sat, 08 Aug 2020 21:42:41 GMT

@nyuphoto wrote:
That's sounds nice on paper but according to Fico scoring 1 installment loan is needed to maximize scores.

You already had 2 before the new loan reported.

My installment loan aggregate utilization changed 3 maybe 4%.

Not especially impactful.

My aggregate revolver utilization is 1%.

Another subject entirely.

Help me understand how 4% change should be a no brainer in dropping double digit points when I replaced a paid off loan with another loan and total aggregate changed a mere 3%.

You yourself said that the new loan had reported but the paid off loan hadn't. So as far as your reports are concerned you now had 3 barely paid off loans instead of 2.

You keep coming back to a 3% change in installment utilization percentage but I don't understand why.
This is not a significant milestone; it is virtually meaningless. And this is not the reason your score went down. It went down because as far as the reported data is concerned, you've taken on more debt.

@SouthJamaica wrote:
@nyuphoto wrote:
Hello,
All 3 scores dropped 14-20 points when my auto was paid. However, I still have a mortgage and the NEW auto loan reported to all 3 CRA's BEFORE the trade-in was reported paid off. I understand that if it was my only installment loan I'd take a major hit but that's not the case. Any insight on this?
I don't see the mystery. You went from 2 barely paid off loans to 3 barely paid off loans in your reports. I would expect your credit scores to lose a bit as your debt load was seen to increase.

Re: Score drop with paid Auto but still have installments

nyuphoto — Sun, 09 Aug 2020 01:04:23 GMT

The score drop occurred when the auto loan reported paid. Auto installments went from 71.5k debt to 41.5k debt.

@SouthJamaica wrote:
@nyuphoto wrote:
That's sounds nice on paper but according to Fico scoring 1 installment loan is needed to maximize scores.

You already had 2 before the new loan reported.

My installment loan aggregate utilization changed 3 maybe 4%.

Not especially impactful.

My aggregate revolver utilization is 1%.

Another subject entirely.

Help me understand how 4% change should be a no brainer in dropping double digit points when I replaced a paid off loan with another loan and total aggregate changed a mere 3%.

You yourself said that the new loan had reported but the paid off loan hadn't. So as far as your reports are concerned you now had 3 barely paid off loans instead of 2.

You keep coming back to a 3% change in installment utilization percentage but I don't understand why.
This is not a significant milestone; it is virtually meaningless. And this is not the reason your score went down. It went down because as far as the reported data is concerned, you've taken on more debt.

@SouthJamaica wrote:
@nyuphoto wrote:
Hello,
All 3 scores dropped 14-20 points when my auto was paid. However, I still have a mortgage and the NEW auto loan reported to all 3 CRA's BEFORE the trade-in was reported paid off. I understand that if it was my only installment loan I'd take a major hit but that's not the case. Any insight on this?
I don't see the mystery. You went from 2 barely paid off loans to 3 barely paid off loans in your reports. I would expect your credit scores to lose a bit as your debt load was seen to increase.

Re: Score drop with paid Auto but still have installments

SouthJamaica — Sun, 09 Aug 2020 13:21:00 GMT

From your original post:

"All 3 scores dropped 14-20 points when my auto was paid. However, I still have a mortgage and the NEW auto loan reported to all 3 CRA's BEFORE the trade-in was reported paid off."

Re: Score drop with paid Auto but still have installments

Anonymous — Sun, 09 Aug 2020 14:03:05 GMT

So your utiization on the original loan was 30/40k, or 75%. That loan went away and was replaced by a loan of 41k/41k or 100% utilization.

Is that correct? If so, that would explain the point drop, imo.

Re: Score drop with paid Auto but still have installments

Revelate — Sun, 09 Aug 2020 15:25:04 GMT

@Anonymous wrote:
So your utiization on the original loan was 30/40k, or 75%. That loan went away and was replaced by a loan of 41k/41k or 100% utilization.

Is that correct? If so, that would explain the point drop, imo.

Might be.

We've had some reports of weird scoring at or above 100%, and at the very top of the range might be some rounding weirdness on that front to your point.

There's also AAOA to consider, and while it sure seems like new installment loans don't seem to change age of youngest revolver, that might not be entirely clear here.

Also, grace period on inquiries possible too. There's a bunch of moving parts here I'd really want to see complete before and after as this doesn't sound right in my experience at all with more installment loans than many. Sadly FICO 8 reason codes suck or I'd be looking there too.