44 Point drop after paying off car!!!

olgagirl1953 · ‎01-12-2021

Hi Guys,

I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(

TheFIGuy · ‎01-12-2021

@olgagirl1953 wrote:
Hi Guys,
I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(

Sorry to hear! Someone will be by shortly to give a better explanation but before they do, can you add DP's:

Installment Loans
UTIL%
AoAA

What you have provided it's going to help them assist you further.

barca · ‎01-12-2021

is this FICO score or vantage.

Anonymous · ‎01-12-2021

@olgagirl1953 wrote:
Hi Guys,
I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(

Sounds about right - I lost 35 points +/- 5 when I paid off my car loand and even more when I went debt free and paid off my mortgage. When I had those two loans I was solid in the 800 club with all 3, now with absolutely no debtI am in the 750 club with all 3. Welcome to the FICO 3-Credit-Bureau Monte game. Heads they win, tails you lose.

Anonymous · ‎01-12-2021

@Anonymous wrote:
@olgagirl1953 wrote:
Hi Guys,
I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(
Sounds about right - I lost 35 points +/- 5 when I paid off my car loand and even more when I went debt free and paid off my mortgage. When I had those two loans I was solid in the 800 club with all 3, now with absolutely no debtI am in the 750 club with all 3. Welcome to the FICO 3-Credit-Bureau Monte game. Heads they win, tails you lose.

@Anonymous so you had a mortgage when you paid off the car and experienced that drop? What was the size of the drop when you closed the mortgage?

Anonymous · ‎01-13-2021

@Anonymous wrote:
@Anonymous wrote:
@olgagirl1953 wrote:
Hi Guys,
I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(
Sounds about right - I lost 35 points +/- 5 when I paid off my car loand and even more when I went debt free and paid off my mortgage. When I had those two loans I was solid in the 800 club with all 3, now with absolutely no debtI am in the 750 club with all 3. Welcome to the FICO 3-Credit-Bureau Monte game. Heads they win, tails you lose.
@Anonymous so you had a mortgage when you paid off the car and experienced that drop? What was the size of the drop when you closed the mortgage?

45-50 points. In the world of FICO points, no good deed goes unpunished.

barca · ‎01-13-2021

sorry for the loss.

My cap one auto just reported closed and I only lost 3 points on FICO 8 , no change on mortgage.

Anonymous · ‎01-13-2021

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
@olgagirl1953 wrote:
Hi Guys,
I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(
Sounds about right - I lost 35 points +/- 5 when I paid off my car loand and even more when I went debt free and paid off my mortgage. When I had those two loans I was solid in the 800 club with all 3, now with absolutely no debtI am in the 750 club with all 3. Welcome to the FICO 3-Credit-Bureau Monte game. Heads they win, tails you lose.
@Anonymous so you had a mortgage when you paid off the car and experienced that drop? What was the size of the drop when you closed the mortgage?
45-50 points. In the world of FICO points, no good deed goes unpunished.

@Anonymous may I ask what the B/L on the mortgage was? Because this seems to indicate mortgage loans are accounted for separately than other loans when it comes to utilization then for version 8.

Anonymous · ‎01-13-2021

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
@olgagirl1953 wrote:
Hi Guys,
I was paying for my vehicle for 75 months (that was the term), and I tried to stretch the payments as much as possible because from my research here, I knew it would drop my score a little. But omg! My credit union reported that they closed my account, and the damage is just heartbreaking after working so hard over the past year and a half trying to rebuild my credit. I was up to 630 but now I'm at 586. Is it normal to make such a big drop, and when, if any, will it come back up? I'm so discouraged right now because it seems that all my hard work was in vain. I don't understand how doing something good such as reducing my debt can have such a negative impact on my credit score. I feel like I have to start all over:-(
Sounds about right - I lost 35 points +/- 5 when I paid off my car loand and even more when I went debt free and paid off my mortgage. When I had those two loans I was solid in the 800 club with all 3, now with absolutely no debtI am in the 750 club with all 3. Welcome to the FICO 3-Credit-Bureau Monte game. Heads they win, tails you lose.
@Anonymous so you had a mortgage when you paid off the car and experienced that drop? What was the size of the drop when you closed the mortgage?
45-50 points. In the world of FICO points, no good deed goes unpunished.
@Anonymous may I ask what the B/L on the mortgage was? Because this seems to indicate mortgage loans are accounted for separately than other loans when it comes to utilization then for version 8.

Sure - what's a B/L? Balance Left? $0 - that's why it was paid off. Original amount $100,000 and paid off in 30 months, never a late payment.

olgagirl1953 · ‎01-13-2021

This was my fico score from Experian.