topic Re: Auto Loan Payoff in Understanding FICO® Scoring

Auto Loan Payoff

Koyote22 — Sun, 05 Oct 2025 23:25:30 GMT

Recently paid off what was left of a $26,000 auto loan with Navy Federal Credit Union. My reports updated paid and closed. One the 1st my FICO fell from 820 to 797 across all three FICO 8's. Even auto loan scores and credit card score scores fell some.

I have 32 trade lines and 17 open. Did this reduce the average age of accounts or can someone maybe clarify what penalty I got to lower them so much? I have a couple installment loans so I didn't think it had anything to do with credit mix, but I could be wrong.

Lastly how fast would a rebound on this drop take me to get my points back?

thanks

Re: Auto Loan Payoff

Patient957 — Mon, 06 Oct 2025 03:56:16 GMT

Most likely the 'no open installment loan' penalty. Was the auto loan your only open installment loan? If so, that's it. You might consider an SSL. Search the board for details. Since you already have NFCU, you can do it with them. I think they call it a pledge loan.

Re: Auto Loan Payoff

pizzadude — Fri, 16 Jan 2026 21:12:37 GMT

Moved to Understanding FICO Scoring

Re: Auto Loan Payoff

Thomas_Thumb — Fri, 16 Jan 2026 23:14:39 GMT

@Koyote22 wrote:
Recently paid off what was left of a $26,000 auto loan with Navy Federal Credit Union. My reports updated paid and closed. One the 1st my FICO fell from 820 to 797 across all three FICO 8's. Even auto loan scores and credit card score scores fell some.

I have 32 trade lines and 17 open. Did this reduce the average age of accounts or can someone maybe clarify what penalty I got to lower them so much? I have a couple installment loans so I didn't think it had anything to do with credit mix, but I could be wrong.

Lastly how fast would a rebound on this drop take me to get my points back?

thanks

It is not credit mix related. No, closure will not impact AAoA or AoOA.

However, Fico 8 and Fico 9 including industry option versions penalize for no open installment loans on file. The penalty is nominally 25 +/- 10 points.

Was it your only open loan? Even if it was, I would not rush out and get a toy SSL loan. Your credit history is more than adequate for best rates at any score 780 or higher. Also, if you still have any type of open, active loan on file, opening and paying down a token SSL has no benefit as a score booster.

FWIW - my score regained a majority of points lost within 2 months of my only open loan reporting closed. However, 5 years later with no open loan I still see the small score offset that existed 2-3 months post loan closure.

Re: Auto Loan Payoff

FicoMike0 — Sat, 17 Jan 2026 00:13:49 GMT

First, your scores are still great.

you weren't clear if you have an open installment loan. If not, as @Thomas_Thumb pointed out, there's a penalty.

Even if you have one open, the auto loan might have brought the aggregate balance to under 9%. If you have an open installment that's above 9%, there's a penalty. Since they are usually small, a ssl will seldom bring aggregate under 9%, if there are other installments.

Re: Auto Loan Payoff

Patient957 — Sat, 17 Jan 2026 03:39:22 GMT

@Thomas_Thumb wrote:
FWIW - my score regained a majority of points lost within 2 months of my only open loan reporting closed.

How did you regain a majority of the points by merely waiting a couple months? Did something else material change?

Are you suggesting that folks who lose points when their only open installment loan closes can regain some of those points by merely waiting? I'm trying to understand what you're saying here.

Re: Auto Loan Payoff

Thomas_Thumb — Sat, 17 Jan 2026 05:38:01 GMT

@Patient957

In late 2020 I started a thread prior to my only open loan on file, a mortgage closing. I wanted to document all 3B scores changes from before to after the loan closed. I had no closed loans at the time. Loan reported closed in Nov 2020. Below is my EX Fico 9 trend showing the dip when the mortgage closed and subsequent regain of points. I can't deny that my pre loan close, buffered 850 scores, could skew "no open loan" impact.

* I had a significant spike in reported total revolving balance that happened around the same time the loan closed. That certainly contributed strongly to the Dec score drop. The early November elevated utilization (13%) had limited impact EX F9 850 => 842. After loan closed the elevated utilization (now 16%) tanked score 842 => 806. EX F9 score rebounded to 849 after balance paydown. So, the loan closure had limited lasting impact (0-5 points) on my EX F8 and F9 scores. Other Fico scores behaved in a similar manner but, lasting impact on EQ and TU scores has been greater, 10-15 points.

Below is the EX F9 score trend from Wells Fargo.

Below are links to posts in the thread:

1. Score graph https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/How-low-will-my-scores-go/td-p/6166236/page/10#

2. Table of scores (scroll to message 68) https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/How-low-will-my-scores-go/td-p/6166236/page/7#

3. Initial post https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/How-low-will-my-scores-go/td-p/6166236#

Re: Auto Loan Payoff

BrutalBodyShots — Sat, 17 Jan 2026 07:54:55 GMT

@Patient957 wrote:
How did you regain a majority of the points by merely waiting a couple months? Did something else material change?

Are you suggesting that folks who lose points when their only open installment loan closes can regain some of those points by merely waiting? I'm trying to understand what you're saying here.

I'm not really sure what they mean either, @Patient957 and their follow up reply to you didn't make much sense to me as I don't believe it answered your question.

If their score increased following the closure of an open loan, it was due to another factor changing. The points from the loan closure cannot come back just by time elapsing. The score loss realized is the bonus from the Amount of Debt slice of the FICO pie going away once the loan reports closed. The only way to regain those specific points would be to replace the closed loan with an open one. If a new loan is not opened, that bonus cannot be regained and therefore any other score gains that take place must be due to another factor.

This is why it's a huge credit myth when people say things like "your score will rebound in 3-6 months after you close a loan" or "your score will rebound in 3-6 months after you open a credit card." Are there cases where scores will be back to where they were in 3-6 months? Sure... but not because the score change realized is being reversed.

It's like if someone is at 90% utilization... then they incur a first ever late payment and their scores drop 85 points. 2 days later, they pay off their 90% utilization and gain 85 points. It would be silly to say or make the assertion that one can "rebound from a late payment in a couple of days" even though on paper, the points lost were regained. Sure they were, but not because a few days (time elapsing) happened since the late payment...

Re: Auto Loan Payoff

Thomas_Thumb — Sat, 17 Jan 2026 23:01:48 GMT

@Patient957 wrote:
@Thomas_Thumb wrote:
FWIW - my score regained a majority of points lost within 2 months of my only open loan reporting closed.
How did you regain a majority of the points by merely waiting a couple months? Did something else material change?

Are you suggesting that folks who lose points when their only open installment loan closes can regain some of those points by merely waiting? I'm trying to understand what you're saying here.

In my case I initially thought my drop to 842 to 806 was solely due to the loan reporting closed because elevated UT had already reported resulting in the 850 => 842 shift. That large, post loan close drop was more than expected.

So, I advise watching score for a couple months post closure. In my case, the loan closure caused a magnified score response to a elevated utilization level. Once UT was brought down, my offset proved to be minor. Direct impact of loan closure on score was much less than initially suspected.

My sequence of events was:

1. Sub 4% utilization. Pre-loan closure score 850

2. Utilization increases to above 10%. Score drops to 842.

3. Loan reports closed and score drops further to 806.

4. Utilization is reduced to sub 4% level. Score increases to 849.

The effect of not having an open loan influences scoring of my file the same now as 5 years ago.

Re: Auto Loan Payoff

BrutalBodyShots — Sun, 18 Jan 2026 04:10:17 GMT

So then, @Thomas_Thumb, are you saying you think your 850 had (say) 20+ points of buffer built into it, such that the loan closure only allowed you to "see" a 1 point drop, but it was in fact much more than that? Was the loan significantly paid down prior to payoff, that is, you were realizing the maximum boost at the end prior to payoff?

Re: Auto Loan Payoff

Thomas_Thumb — Sun, 18 Jan 2026 05:42:22 GMT

@BrutalBodyShots

My loan was a mortgage. It had 15 year fixed rate terms. Standard monthly payments were made until payoff. So, under 0.5% B/L ratio prior to last payment.

Yes, I had a buffer at 850 when my loan was open and it was likely around 20 points. At low utilization (under 4%) I ended up with 1 point loss associated with no open loan. However, I initially thought the closure penalty was 30-35 point and would persist at that level. That belief was based on my 842 => 806 drop after loan closure when utilization was elevated.

The point I am trying to get across is not specific to 850 and a buffer. An example might help.

Say a profile has an open loan and a 780 score. Aggregate utilization is 4%. Then aggregate utilization reports at 12% and score drops to 770. The spike in utilization caused a 10 point decrease.

Say the same profile has a closed loan with 4% utilization. Score is 760. Now aggregate utilization goes to 12% and score drops to 740.

In summary, comparing score differences open/closed at 4% UT shows a 20 point offset (780 => 760). By contrast comparing at 12% UT shows a 30 point offset (770 => 740)

In essence the open loan mutes the impact of elevated utilization. So, if UT is high when loan closes a 30 point drop is observed but that offset is not fixed - it can change. The offset is not time related, but can vary over time due to other factors.

I saw muting with my open Mortgage. Not sure an open Auto loan has that effect.

Re: Auto Loan Payoff

BrutalBodyShots — Mon, 19 Jan 2026 02:07:15 GMT

Understood. And I'm assuming you theorize this to be the case since both variables (installment loan utilization and revolving utilization) are part of the same slice of the FICO pie, Amount of Debt? With both present (open) more consideration needs to be given to both.

Have you thought about it reversed? Someone has an open loan and [one] open credit card and they close the card. They'd take a huge score hit of course, but that hit could (would) therefore be different than it would be if they had no open loan.

Re: Auto Loan Payoff

Zoostation1 — Sun, 25 Jan 2026 21:47:37 GMT

@BrutalBodyShots Not sure how relevant it is to your last comment, but on a student loans only profile (4 open 1 closed) my sister was at a EQ8 740 and EX8 767 just before she opened her first CC (BCE). I had her sign up for the free versions on myFICO and Experian just before applying last June.

Re: Auto Loan Payoff

BrutalBodyShots — Sun, 25 Jan 2026 23:41:27 GMT

Good to know. I'd imagine her scores increased a good chunk when that first revolver reported?

Re: Auto Loan Payoff

Zoostation1 — Wed, 28 Jan 2026 04:44:06 GMT

I'll see if I can get the info from her for DPs