topic Re: How low will it go????? in Understanding FICO® Scoring

How low will it go?????

sarge12 — Tue, 09 Mar 2021 00:51:25 GMT

In about 2 months, the vehicle financed in my name for my Niece will be paid off. In January 2022 my mortgage will be paid off. That will leave me with revolvers, and only revolvers. I never carry a balance on them. Taking guesses as to how much my score will drop due to no non-mortgage installment loans, and then in January no mortgage either. I expect a hard hit due to these being lost in my credit mix. Nothing but mostly 0 balance credit cards will be reporting. I think I will lose all these 800+ scores I have become so used to seeing.

Re: How low will it go?????

disdreamin — Tue, 09 Mar 2021 01:16:12 GMT

Following. I'm keeping my fingers crossed I can be in the same position before too long (old cars willing)

Re: How low will it go?????

Horseshoez — Tue, 09 Mar 2021 01:40:18 GMT

I'm kind of new to the FICO game, but if I understand correctly, if you apply for a Secured Chared Loan, the interest is minimal and that will keep at least one installment loan on your record.

The above said, I'll lurk in this thread to see what the (much more knowledgable) collective has to say.

Congratulations on being (nearly) debt free!

Re: How low will it go?????

stw715 — Tue, 09 Mar 2021 03:07:54 GMT

Below were my TU F8 reacting to a auto loan reporting paid off and then new one being reported, I only have one installment loan, no mortgage.

Two months before paid,

Reporting paid off...

Then new auto loan being reported...

Re: How low will it go?????

sarge12 — Tue, 09 Mar 2021 03:08:43 GMT

@Horseshoez wrote:
I'm kind of new to the FICO game, but if I understand correctly, if you apply for a Secured Chared Loan, the interest is minimal and that will keep at least one installment loan on your record.

The above said, I'll lurk in this thread to see what the (much more knowledgable) collective has to say.

Congratulations on being (nearly) debt free!

With a total lack of debt and about 400,000 in 401k, plus drawing 2200 a month in SSDI, I really do not need high scores. I am 62 and have a damaged spinal cord that disabled me at 54. I will not play the keep an installment loan at all cost game. I might even close all except 5 of my 20 credit card to really tank my scores. I just can't really make myself care too much about a credit score for credit I do not need. The secured loan would work, if I needed credit, but I don't. Shoot, I might just run all 20 cards up to 5 bucks and default on all of them, just for kicks and giggles. Not really, the credit cards are needed for Amazon, but it would be hilarious. Not even a late payment on anything in 25 years, and suddenly go 3+ months late on 100 bucks total over 20 cards. I can't say I am not tempted, and I could try to set them up on a buck a month payment plan just to drive them nuts. It would be fun just talking to them, and if they offered to forgive the debt, I would threaten to sue...It is my debt, you leave that on there, I earned it, and I am shooting for low score.

Re: How low will it go?????

stw715 — Tue, 09 Mar 2021 03:28:03 GMT

Good chance your scores may not dip below 800 at least with F9. Before and after for my EQ F9...

Re: How low will it go?????

Anonymous — Tue, 09 Mar 2021 03:46:00 GMT

Hey there Sarge, long time no see! Good to see you posting.

First, congrats on nearing the payoff of your mortgage. That's always a great feeling!

Any points lost from the payoff of a loan is not due to any change in credit mix. Credit mix takes into consideration both open and closed accounts on your CR, so assuming the loan(s) stay on your reports for ~10 years following closure there will be no change to your credit mix and no score loss from that factor. The common loss of points seen from the payoff of an only loan is due to the boost from having an almost-paid-off installment loan being eliminated with the closure of the loan. This is part of the Amounts Owed sector of the Fico pie. Depending on the scoring model you're looking at, once your mortgage reports closed you could be looking at score drops of 10-25 points in most cases.

Re: How low will it go?????

KatSoDak — Tue, 09 Mar 2021 15:51:01 GMT

@Anonymous wrote:
Hey there Sarge, long time no see! Good to see you posting.

First, congrats on nearing the payoff of your mortgage. That's always a great feeling!

Any points lost from the payoff of a loan is not due to any change in credit mix. Credit mix takes into consideration both open and closed accounts on your CR, so assuming the loan(s) stay on your reports for ~10 years following closure there will be no change to your credit mix and no score loss from that factor.

I know this is accepted fact, but if closed accounts count why is number one reason code on both EX and EQ "Lack of recent installment loan information"?

Re: How low will it go?????

Revelate — Tue, 09 Mar 2021 16:03:20 GMT

Zero, because you still have the open mortgage.

My scores didn't move when I paid off my auto loan at least on none of the classic scores I have access to. Only way it would to my knowledge is if it meaningfully impacted your installment utilization which seems unlikely. Actually in general I don't think any of the classic scores differentiate between installment loan types at all, similar to how revolvers aren't differentiated either (Amex charge cards not withstanding). Some Auto-enhanced (AU) industry scores do look specifically at auto loan history but I don't pay attention to those as a general rule.

When your mortage closes next year, that is where I would expect a ding.

Re: How low will it go?????

sarge12 — Tue, 09 Mar 2021 18:33:49 GMT

@Revelate wrote:
Zero, because you still have the open mortgage.

My scores didn't move when I paid off my auto loan at least on none of the classic scores I have access to. Only way it would to my knowledge is if it meaningfully impacted your installment utilization which seems unlikely. Actually in general I don't think any of the classic scores differentiate between installment loan types at all, similar to how revolvers aren't differentiated either (Amex charge cards not withstanding). Some Auto-enhanced (AU) industry scores do look specifically at auto loan history but I don't pay attention to those as a general rule.

When your mortage closes next year, that is where I would expect a ding.

In either case, I look forward to being debt free for the first time since I first went into debt, and it only took 47 years to do it.

Re: How low will it go?????

Anonymous — Tue, 09 Mar 2021 18:38:08 GMT

@KatSoDak wrote:
I know this is accepted fact, but if closed accounts count why is number one reason code on both EX and EQ "Lack of recent installment loan information"?

That negative reason statement isn't pointing to credit mix, it's pointing to the Amounts Owed sector of the Fico pie.

Re: How low will it go?????

Anonymous — Tue, 09 Mar 2021 18:39:42 GMT

@sarge12 wrote:
In either case, I look forward to being debt free for the first time since I first went into debt, and it only took 47 years to do it.

Absolutely! Finances over Fico, 99 times out of 100.

Re: How low will it go?????

KatSoDak — Tue, 09 Mar 2021 18:43:16 GMT

@Anonymous wrote:
@KatSoDak wrote:
I know this is accepted fact, but if closed accounts count why is number one reason code on both EX and EQ "Lack of recent installment loan information"?
That negative reason statement isn't pointing to credit mix, it's pointing to the Amounts Owed sector of the Fico pie.

So this is to Loans what All Zero is to revolving credit?

Re: How low will it go?????

Horseshoez — Tue, 09 Mar 2021 18:50:50 GMT

@sarge12 wrote:
In either case, I look forward to being debt free for the first time since I first went into debt, and it only took 47 years to do it.

I understand completly; you are to be commended and congratulated! I ended up debt free this time last year, first time since 1980; of course your method is far more honorable than mine (former business partner ran up huge debt in my name and I needed to declare Chapter 13 as a result).

Re: How low will it go?????

Anonymous — Tue, 09 Mar 2021 19:11:56 GMT

@KatSoDak wrote:
So this is to Loans what All Zero is to revolving credit?

Yes you are correct. That code is reported quite often when someone closes out their only open installment loan and realizes a 20-25 point drop from doing so.

Re: How low will it go?????

sarge12 — Thu, 01 Apr 2021 00:11:25 GMT

@Horseshoez wrote:
@sarge12 wrote:
In either case, I look forward to being debt free for the first time since I first went into debt, and it only took 47 years to do it.
I understand completly; you are to be commended and congratulated! I ended up debt free this time last year, first time since 1980; of course your method is far more honorable than mine (former business partner ran up huge debt in my name and I needed to declare Chapter 13 as a result).

I, when I was younger filed both a chapter 13 and a chapter 7. Neither resulted in me being debt free completely. The chapter 13 paid everything off 100% but I went into debt for a car in the final months of repayment plan. I kept my house, and it's mortgage when filing chapter 7. So neither event left me 100% debt free. I fail to see how declaring chapter 13 was dis-honorable. Filing BK would be dis-honorable if you had planned to do so when taking on debt. Otherwise, it might be bad decisions, or just life throwing a curve ball, but filing is not dis-honorable. Lenders would love for you to believe that, even though lenders file chapter 7 or 11 as well. I have no shame for filing, I have shame for the stupid things I did to leave me no choice but to file.

Re: How low will it go?????

Horseshoez — Thu, 01 Apr 2021 00:31:47 GMT

@sarge12, I have some guilt; had I been more on top of what my former business partner was doing, things wouldn't have gotten so out of control. The fact we'd been business partners for 30 years and I trusted him implicitly certainly played into my lack of oversight, even still, I do bear some of the blame. Now, if all of that money had been spent wining and dining on a beach in Maui or some such, then I'd feel some industrial strength guilt.

As things stand now, I can live with it, but my days of entrepreneurship, especially if it is a partnership, are probably over. The good news here is A) I figure I only need to work another 8 years, into my early 70s, to afford a comfortable retirement, and B) while in my Chapter 13 I ended up leaving what had been a stable career (in a mature industry) of nearly 40 years behind and moving into the very new/hot/up and coming field of Conversational AI, and even though ageism exists in the hiring world, and even though I'm in my mid-60s, apparently I've become a pretty hot commodity as I'm turning down requests for interviews on an almost daily basis. Go figure.

Re: How low will it go?????

sarge12 — Sat, 03 Apr 2021 01:43:05 GMT

@Horseshoez wrote:
@sarge12, I have some guilt; had I been more on top of what my former business partner was doing, things wouldn't have gotten so out of control. The fact we'd been business partners for 30 years and I trusted him implicitly certainly played into my lack of oversight, even still, I do bear some of the blame. Now, if all of that money had been spent wining and dining on a beach in Maui or some such, then I'd feel some industrial strength guilt.

As things stand now, I can live with it, but my days of entrepreneurship, especially if it is a partnership, are probably over. The good news here is A) I figure I only need to work another 8 years, into my early 70s, to afford a comfortable retirement, and B) while in my Chapter 13 I ended up leaving what had been a stable career (in a mature industry) of nearly 40 years behind and moving into the very new/hot/up and coming field of Conversational AI, and even though ageism exists in the hiring world, and even though I'm in my mid-60s, apparently I've become a pretty hot commodity as I'm turning down requests for interviews on an almost daily basis. Go figure.

I think you need to cut yourself a break, we have all trusted those that in hindsight we should not have. I once hit, and killed a drunk pedestrian in the highway, but it was not my fault. In hindsight, had I left work earlier, it would not have happened. Hindsight always provides answers that were unclear at that time. You trusted him because at that time he had done nothing to cause a lack of trust. Stop feeling guilt for what you can't change. Learn from it, but stop feeling guilt for not taking steps most would not take. When driving on rainy nights now, I am more aware of what parts of a road I can't see. Could that prevent another such tragedy...maybe. It still does not make me responsible for some drunken pedestrians actions that night.

Re: How low will it go?????

sarge12 — Sat, 01 Jan 2022 10:54:08 GMT

Just an update for anyone following my postings here, or anywhere on this forum....many changes the last 3 months. My 93yo Mother fell and cracked her hip, and after 3 weeks in the hospital and restorative care we had to move her in with my sister. It was not broken completely in two, so she can still walk with a walker, but we must watch her to prevent further falls. My 2003 Impala was not sufficient for constant drives to my sisters house, so I paid off my house and financed a 2022 Camry LE. I also took a 200 buck bribe to PC one of my 2 Bank of America Cash reward cards to the Unlimited Cash rewards with 1.5% cash back. I also have a paypal credit card coming with 2% cash back. This is my first ever card with Synchrony, but it is a mastercard, so I figured...why not? The car loan was at 1.99%, and I could have paid cash for it, but the taxes from withdrawing over 30K from my 401K would be more than the interest on the loan. All these changes have yet to show up on my credit scores yet, so I will not update my scores for a while. I am expecting a fairly significant drop in all my scores, especially when the mortgage shows as being paid off. My free time has been drasticly reduced, which is why I have not posted in a while. My Mother also has dementia, so I have to handle her finances, with her money. I hope 2022 is a much better year.

Re: How low will it go?????

disdreamin — Sat, 01 Jan 2022 15:57:13 GMT

@sarge12 wrote:
Just an update for anyone following my postings here, or anywhere on this forum....many changes the last 3 months. My 93yo Mother fell and cracked her hip, and after 3 weeks in the hospital and restorative care we had to move her in with my sister. It was not broken completely in two, so she can still walk with a walker, but we must watch her to prevent further falls. My 2003 Impala was not sufficient for constant drives to my sisters house, so I paid off my house and financed a 2022 Camry LE. I also took a 200 buck bribe to PC one of my 2 Bank of America Cash reward cards to the Unlimited Cash rewards with 1.5% cash back. I also have a paypal credit card coming with 2% cash back. This is my first ever card with Synchrony, but it is a mastercard, so I figured...why not? The car loan was at 1.99%, and I could have paid cash for it, but the taxes from withdrawing over 30K from my 401K would be more than the interest on the loan. All these changes have yet to show up on my credit scores yet, so I will not update my scores for a while. I am expecting a fairly significant drop in all my scores, especially when the mortgage shows as being paid off. My free time has been drasticly reduced, which is why I have not posted in a while. My Mother also has dementia, so I have to handle her finances, with her money. I hope 2022 is a much better year.

Yikes, so many changes. The credit score game is fun, but it isn't always important in the grand scheme of things. Let's hope 2022 is far easier on you and your family.