topic Payoff question in Understanding FICO® Scoring

Payoff question

joemomma — Thu, 01 Apr 2021 19:21:51 GMT

Buying a house and getting my first mortgage (close 4/22). Once we're all closed up, my parents would like to pay off my car as a gift. I have about 3 years left and owe about 17k principal on a 28k loan. My current credit card utilization is <1% on 39k (6 cards). My Fico8 range is 818-828. No other active trade lines. 1 closed auto loan. no derogatories.

I'm guessing i'll take a nice hit when the mortgage starts reporting, but generally speaking will I incur an additional fico hit for paying off the car?

Re: Payoff question

SouthJamaica — Thu, 01 Apr 2021 19:28:24 GMT

@joemomma wrote:
Buying a house and getting my first mortgage (close 4/22). Once we're all closed up, my parents would like to pay off my car as a gift. I have about 3 years left and owe about 17k principal on a 28k loan. My current credit card utilization is <1% on 39k (6 cards). My Fico8 range is 818-828. No other active trade lines. 1 closed auto loan. no derogatories.

I'm guessing i'll take a nice hit when the mortgage starts reporting, but generally speaking will I incur an additional fico hit for paying off the car?

No you won't. You might even pick up some points for reducing your number of accounts with a balance and your total indebtedness.

Re: Payoff question

joemomma — Thu, 01 Apr 2021 19:41:08 GMT

perfect. thanks.

Re: Payoff question

dragontears — Fri, 02 Apr 2021 02:11:57 GMT

@joemomma wrote:
Buying a house and getting my first mortgage (close 4/22). Once we're all closed up, my parents would like to pay off my car as a gift. I have about 3 years left and owe about 17k principal on a 28k loan. My current credit card utilization is <1% on 39k (6 cards). My Fico8 range is 818-828. No other active trade lines. 1 closed auto loan. no derogatories.

I'm guessing i'll take a nice hit when the mortgage starts reporting, but generally speaking will I incur an additional fico hit for paying off the car?

Just an FYI, your FICO 8 scores might not take any hit when the mortgage reports, last mortgage I got didn't change my scores a single point when it reported.

On the other hand, my mortgage scores dropped 20-25 points

Re: Payoff question

Anonymous — Fri, 02 Apr 2021 02:55:55 GMT

It seems the higher your credit score before any changes to credit, the lesser impact it actually has. When I refinanced my mortgage last year, my Fico 8 scores dropped less than 10 points and then rebounded in the next 2-3 months. I am aware mortgage credit uses older Fico versions but being a subscriber to myfico.com I was able to see the affects on my Fico 8 scores before and after the new mortgage origination. Very little impact . However I did just payoff a car loan in February 2021 and will report back the affect of it when it updates on credit. You can see my current scores below.

Re: Payoff question

joemomma — Fri, 02 Apr 2021 16:04:27 GMT

Thanks for the continued commentary!

It will be interesting to watch. I think I'll be looking to add a couple of new cards as soon as I close so that's going to be an impact. Hopefully grab at least one long term 0% intro offer and then some sort of rewards.

Re: Payoff question

Anonymous — Sun, 11 Apr 2021 06:58:02 GMT

@joemomma wrote:
Thanks for the continued commentary!

It will be interesting to watch. I think I'll be looking to add a couple of new cards as soon as I close so that's going to be an impact. Hopefully grab at least one long term 0% intro offer and then some sort of rewards.

@joemomma that is the perfect time to acquire them if you need them!

Re: Payoff question

Anonymous — Tue, 13 Apr 2021 17:08:37 GMT

Updates scores after paying off my car loan in February 2021 open with Toyota Financial Services for 3 years had an effect of 1-5 points lower per bureau for Fico 8 scores. Very little effect.

Re: Payoff question

E_Fizzy — Sun, 22 May 2022 16:20:20 GMT

@Anonymous Are you able to recall how the paid off car loan may have affected your mortgage scores?