topic Re: 2 years to recover points lost due to auto loan payoff in Understanding FICO® Scoring

2 years to recover points lost due to auto loan payoff

LongsufferingDetLionFan — Wed, 11 Oct 2023 17:09:55 GMT

It took 2 years, but my Fico TU 8 score has finally recovered from a 39 point drop, that happened after paying off auto loan in Sept. of 2021. Score went from 810 to 771 and now back to 810. At the time I had zero knowledge of the intricacies of Fico scoring. In what Alternate reality, I thought, would paying off an auto loan, cause such a drastic loss of points. Looking for answers led me here, to myfico, That being my only loan was the problem. 810 was the end result of decades no credit, bad credit, no credit again, came close a few times of filing BK, so-so credit, good credit and finally excellent credit. Hey, many say 771 is a good score, you will get the best rate, blah blah. I worked hard for it, deprived myself of many things I probably didn’t need, paid down my debts, score would go up 1 or 2 pts, Then Bam, 39 pt. drop. In 2021 had 10 cards, 3 with balances. A Citi BT card had 70% util., other 2 less than 10%. Overall util. was 27%. 2023, 11 cards, 3 with balances , 4% overall util., none higher than 8%. Hard pulls, 2012, 0 12 months, 1 24 months, same in 2023.

Re: 2 years to recover points lost due to auto loan payoff

SouthJamaica — Wed, 11 Oct 2023 18:06:02 GMT

@LongsufferingDetLionFan wrote:
It took 2 years, but my Fico TU 8 score has finally recovered from a 39 point drop, that happened after paying off auto loan in Sept. of 2021. Score went from 810 to 771 and now back to 810. At the time I had zero knowledge of the intricacies of Fico scoring. In what Alternate reality, I thought, would paying off an auto loan, cause such a drastic loss of points. Looking for answers led me here, to myfico, That being my only loan was the problem. 810 was the end result of decades no credit, bad credit, no credit again, came close a few times of filing BK, so-so credit, good credit and finally excellent credit. Hey, many say 771 is a good score, you will get the best rate, blah blah. I worked hard for it, deprived myself of many things I probably didn’t need, paid down my debts, score would go up 1 or 2 pts, Then Bam, 39 pt. drop. In 2021 had 10 cards, 3 with balances. A Citi BT card had 70% util., other 2 less than 10%. Overall util. was 27%. 2023, 11 cards, 3 with balances , 4% overall util., none higher than 8%. Hard pulls, 2012, 0 12 months, 1 24 months, same in 2023.

Welcome to the forum. Congratulations on recovering your lost points.

Re: 2 years to recover points lost due to auto loan payoff

LongsufferingDetLionFan — Wed, 11 Oct 2023 19:05:33 GMT

Thank you, been lurking around a few years. Soaked up a lot of knowledge

Re: 2 years to recover points lost due to auto loan payoff

GZG — Thu, 12 Oct 2023 16:05:46 GMT

congrats on getting those points back

https://ficoforums.myfico.com/t5/Personal-Finance/Navy-or-Penfed-still-work-for-SSL-technique/td-p/6636666

https://ficoforums.myfico.com/t5/Personal-Finance/SSL-Share-Secured-Loan-Technique/td-p/6371294

if you don't have any open loans and aren't planning on open loans in the near future 1-5 years? There are secured loans you can open which provide the FICO score benefits for both having an open loan and having a loan nearly paid off.

Navy Federal Credit Union and PenFed credit union come to mind because they should offer these loans in a way where payments push back future due dates while still allowing you to keep the loan open for the entire term. If you can't push back the due date, you lose a ~~large~~ portion of the benefit, so traditional, generic credit builder loans are ~~pretty bad tbh~~ helpful, but not as good

it wouldn't surprise me if my ~790's would be closer to 750-760 if I closed the loan out

I'd be curious to learn how much (if at all) open loan/loan nearly paid off FICO score bonus is tuned down for both FICO 9/10/10T

Re: 2 years to recover points lost due to auto loan payoff

Zoostation1 — Thu, 12 Oct 2023 00:57:51 GMT

@GZG wrote:

I'd be curious to learn how much (if at all) open loan/loan nearly paid off FICO score bonus is tuned down for both FICO 9/10/10T

I don't have an installment loan but have the same question on how it affects other models. I've toyed with the idea of a PenFed SSL (NFCU is not an option unless my dad were to join since I've never served), just to carry me through the 4yr until my BK falls off but I'm not sure it's worth the hassle of tying up money that could be in a HYSA or other investments for the score bonus.

Re: 2 years to recover points lost due to auto loan payoff

Horseshoez — Thu, 12 Oct 2023 01:38:00 GMT

@Zoostation1 wrote:
@GZG wrote:

I'd be curious to learn how much (if at all) open loan/loan nearly paid off FICO score bonus is tuned down for both FICO 9/10/10T

I don't have an installment loan but have the same question on how it affects other models. I've toyed with the idea of a PenFed SSL (NFCU is not an option unless my dad were to join since I've never served), just to carry me through the 4yr until my BK falls off but I'm not sure it's worth the hassle of tying up money that could be in a HYSA or other investments for the score bonus.

I'm like 95% sure you can join if your father served, even if he never joined.

Re: 2 years to recover points lost due to auto loan payoff

Thomas_Thumb — Thu, 12 Oct 2023 15:30:34 GMT

@GZG wrote:
congrats on getting those points back

https://ficoforums.myfico.com/t5/Personal-Finance/Navy-or-Penfed-still-work-for-SSL-technique/td-p/6636666
https://ficoforums.myfico.com/t5/Personal-Finance/SSL-Share-Secured-Loan-Technique/td-p/6371294

I'd be curious to learn how much (if at all) open loan/loan nearly paid off FICO score bonus is tuned down for both FICO 9/10/10T

Fico 9 behaves like Fico 8 when an only open loan is closed. I closed my only open loan, a mortgage, in 2020. I purchased before/after 3B reports to look at impact on all available Fico scores.

No Fico 10 back then so no data on how those models adjust score in that situation.

Re: 2 years to recover points lost due to auto loan payoff

masscredit — Thu, 12 Oct 2023 15:59:59 GMT

@GZG wrote:
congrats on getting those points back

https://ficoforums.myfico.com/t5/Personal-Finance/Navy-or-Penfed-still-work-for-SSL-technique/td-p/6636666
https://ficoforums.myfico.com/t5/Personal-Finance/SSL-Share-Secured-Loan-Technique/td-p/6371294

if you don't have any open loans and aren't planning on open loans in the near future 1-5 years? There are secured loans you can open which provide the FICO score benefits for both having an open loan and having a loan nearly paid off.

Navy Federal Credit Union and PenFed credit union come to mind because they should offer these loans in a way where payments push back future due dates while still allowing you to keep the loan open for the entire term. If you can't push back the due date, you lose a large portion of the benefit, so traditional, generic credit builder loans are pretty bad tbh

Are there any other banks/credit unions where this can be done? I burned NFCU and PENFED in my BK so I can't use them for this. I currently have a $1500 SSL at Andrews. I quickly paid it down to get the balance below 69% but that also ate up the time until the loan is paid off. That will happen around December of next year. I should have went with a higher amount and extended the time. I don't get the benefit of having it below 9% but I gained a good number of points by having this in my credit mix.

Re: 2 years to recover points lost due to auto loan payoff

GZG — Thu, 12 Oct 2023 16:09:21 GMT

@masscredit wrote:
Are there any other banks/credit unions where this can be done? I burned NFCU and PENFED in my BK so I can't use them for this. I currently have a $1500 SSL at Andrews. I quickly paid it down to get the balance below 69% but that also ate up the time until the loan is paid off. That will happen around December of next year. I should have went with a higher amount and extended the time. I don't get the benefit of having it below 9% but I gained a good number of points by having this in my credit mix.

I'm not sure if there are other banks that push back payment dates, maybe a read through and a post in the SSL thread might help and somebody will know something

@masscredit wrote:
I don't get the benefit of having it below 9% but I gained a good number of points by having this in my credit mix.

there's an additional FICO score boost for aggregate loan percentage being that low

below 9% is when FICO stops thinking you have a high loan aggreate percentage remaining

which is why a loan that pushes back payment dates is ideal, because you get that bonus for the entire length of the loan as opposed to the few months where it is that low

having an open loan is still a good thing though in terms of fico scoring, I was a little harsh in saying that it wasn't very good, it does help, just having it below 9% is ideal

Re: 2 years to recover points lost due to auto loan payoff

masscredit — Thu, 12 Oct 2023 16:34:22 GMT

@GZG wrote:
I'm not sure if there are other banks that push back payment dates, maybe a read through and a post in the SSL thread might help and somebody will know something

@masscredit wrote:
I don't get the benefit of having it below 9% but I gained a good number of points by having this in my credit mix.

We can no longer reply in the SSL thread. It looks like SSFCU might be an option when it comes to this. Has anyone used them to confirm? If not, I'll just give them a call to get the detail. I usually try not to call about stuff like this. Don't want them to think (know) there is some alternative motive for the loan and possibly close that door for us.

Re: 2 years to recover points lost due to auto loan payoff

coldfusion — Wed, 18 Oct 2023 13:05:14 GMT

@Horseshoez wrote:
@Zoostation1 wrote:
@GZG wrote:

I'd be curious to learn how much (if at all) open loan/loan nearly paid off FICO score bonus is tuned down for both FICO 9/10/10T

I don't have an installment loan but have the same question on how it affects other models. I've toyed with the idea of a PenFed SSL (NFCU is not an option unless my dad were to join since I've never served), just to carry me through the 4yr until my BK falls off but I'm not sure it's worth the hassle of tying up money that could be in a HYSA or other investments for the score bonus.
I'm like 95% sure you can join if your father served, even if he never joined.

Bump that to 100% - their having served is sufficient, there's no requirement that they are or ever were a NFCU member. They do sometimes later spot-check your eligiblity and request you provide proof of their service and will terminate membership if you fail to adequately comply.

USAA allows 18+ children of veterans and active service to themselves become members, but nowadays only if their parent is/was also a USAA member.