topic Re: Score dropped after paying off mortgage in Understanding FICO® Scoring

Score dropped after paying off mortgage

nzbgsf — Sat, 18 Dec 2021 19:59:02 GMT

We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.

Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advance

Re: Score dropped after paying off mortgage

dragontears — Sat, 18 Dec 2021 21:45:43 GMT

@nzbgsf wrote:
We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.
Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advance

Which scoring model?

Re: Score dropped after paying off mortgage

nzbgsf — Sun, 19 Dec 2021 07:24:39 GMT

Version 8

@dragontears wrote:
@nzbgsf wrote:
We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.
Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advance
Which scoring model?

Version 8

Re: Score dropped after paying off mortgage

coldfusion — Sun, 19 Dec 2021 11:21:07 GMT

FICO scores factor in whether or not there is an open installment loan like a mortgage or auto loan reporting, and if so it also takes into account the percentage of the original loan amount still outstanding. That 24 point loss is consistent with having just closed one's last installment loan.

This isn't a derog, it's just a factor of how scoring models work.

Re: Score dropped after paying off mortgage

SouthJamaica — Sun, 19 Dec 2021 15:13:07 GMT

@nzbgsf wrote:
We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.
Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advance

If she had no other installment loans open, it was probably because she experienced the 'no open loan' penalty, which typically hammers FICO 8's and 9's. But if you check her mortgage scores, I wager you'll see little or no corresponding decrease there.

Once all the changes have reported, you should both be pulling MyFICO's 3-bureau report, so you'll know where your mortgage scores are.