Hey everyone! I fortunately was able to pay off my 60 month auto loan 6 months early. Here are the resultant FICO credit score drops. Much higher than I expected and maybe this will help other people.
EQ: 850 -> 792 -58pts
EX: 828 -> 768 -60pts
TU: 844 -> 780 -64pts
@DoogieBall wrote:Hey everyone! I fortunately was able to pay off my 60 month auto loan 6 months early. Here are the resultant FICO credit score drops. Much higher than I expected and maybe this will help other people.
EQ: 850 -> 792 -58pts
EX: 828 -> 768 -60pts
TU: 844 -> 780 -64pts
Unless you have another reporting loan (school, mortgage, maybe personal), FICO penalizes your score without an open loan reporting. It is possible to get back to where you were with time though. Congratulations on your payoff! Finances over FICO.
@JoeRockhead wrote:As many times as I've seen this happen, and understand that it's just a fact that you get penalized for not having an open loan, credit mix, using your credit, managing different types of debt, etc, etc... Taking such a large hit to scores just makes no sense, at all. But, good for you, and congratulations on your payoff!
@JoeRockhead @AdkinsYou don't actually get a penalty for no active loan, and as long as the loan is on your report satisfies the credit mix bonus, you also do not lose credit age, and the loan will continue to age until it falls off your report in 10 years (or 7 with bads)
What happens is loans have an analog to credit card utilization. Active loans get a significant score boost below 9.5% remaining balance. When you finish your loan there is no penalty you simply stop getting a bonus. I know some might say that is semantics but it is not. Depending on your remaining balance it is possible your score will increase paying a loan from a very high remaining % of balance in relation to starting amount to zero.
First thing I'd like to say is thank you to all that replied. Through various searched threads on the forums, I realized that a score drop was inevitable. The climb from the 600s seemed like an eternity and getting to the 800s still causes much disbelief as I never thought I would break the 760 sweet spot.
@JoeRockhead I'll try to keep my datapoints concise mainly because once I start to overthink, I tend to forget what I may have written in a previous sentence. Hahha.
My big jumps in scores happened when my BK7 was off all the reports. If you refer to my sig, the scores I had before any of the early exclusions saw modest to huge jumps. Specifically EQ that jumped 135 points. The reason I mention that is I've read about "buckets" in scoring that affect BK and clean reports differently. Something to do with the internal algorithm favoring the BK7/13 in scoring. I may be completely wrong in my understanding. This may be a different discussion entirely. Lol
During the two years post BK7, I applied for 1 credit card which bumped me down a few points. I did AZEO as best as I could and managed to get my scores into the 840-850 range. Not sure if this has any bearing on why there was a relatively high drop but plenty of people with more knowledge of FICO could enlighten me and I would greatly be appreciative.
All in all "In the end, the massive score hit is a huge disappointment no matter how you slice it."
@JoeRockhead wrote:
@Beefy1212 wrote:
@JoeRockhead wrote:As many times as I've seen this happen, and understand that it's just a fact that you get penalized for not having an open loan, credit mix, using your credit, managing different types of debt, etc, etc... Taking such a large hit to scores just makes no sense, at all. But, good for you, and congratulations on your payoff!
@JoeRockhead @AdkinsYou don't actually get a penalty for no active loan, and as long as the loan is on your report satisfies the credit mix bonus, you also do not lose credit age, and the loan will continue to age until it falls off your report in 10 years (or 7 with bads)
What happens is loans have an analog to credit card utilization. Active loans get a significant score boost below 9.5% remaining balance. When you finish your loan there is no penalty you simply stop getting a bonus. I know some might say that is semantics but it is not. Depending on your remaining balance it is possible your score will increase paying a loan from a very high remaining % of balance in relation to starting amount to zero.
Geez, just when I was confident in going to bed last night thinking I had all the bases covered with the whole etc, etc...thing. I wake up to find out that sadly, I was mistaken. To be clear, the intention of my post was to say in essence 'hey @DoogieBall, no matter what cockamamie antecedents may exist, it's a bummer your scores took that kind of massive hit, I can relate and my condolences, but never the less, good for you for paying off the loan'.
While it's true you do get a boost in your score (and we're talking about FICO8 here) when your balance goes under 9% (I think 8.9% is the widely accepted threshold), I find it highly unlikely, and think we can agree, that Mr. or Mrs, or Miss @DoogieBall got a 58, 60 and 64 point bump, or bonus in their scores at that moment in time. If I had to guess, I'd say it was more in the 30+- range. with that said, it would also have to be considered that their scores also increased as the % of loan balance diminished over time until said time it was paid in full, as there are other factors involved during that time as well, such as their file/other accounts aging further, other account balance factors, etc, etc...
Perhaps they will chime in and let us know what kind of score bump they initially got (if they noted it) so that future generations of MyFICOers can have more DPs to consider as further evidence, or pontificate, whatever the case may be. Regardless, It's been pretty well documented, and widely acknowledged on these threads that there is strong evidence to substantiate a FICO penalty exists for having no open installment loan, just as there is a penalty for having 0 balances across all open revolving accounts. If you have data to the contrary, by all means, please share it as it would greatly benefit the community.
To quote a famous member of this community, "Every so often, Fico apologists throw in their "datasets", "research showed", "aliens", but it's all just gobbledygook". In the end, the massive score hit is a huge disappointment no matter how you slice it.
🤣 love that second to last sentence!
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@JoeRockhead wrote:
@Beefy1212 wrote:
@JoeRockhead wrote:As many times as I've seen this happen, and understand that it's just a fact that you get penalized for not having an open loan, credit mix, using your credit, managing different types of debt, etc, etc... Taking such a large hit to scores just makes no sense, at all. But, good for you, and congratulations on your payoff!
@JoeRockhead @AdkinsYou don't actually get a penalty for no active loan, and as long as the loan is on your report satisfies the credit mix bonus, you also do not lose credit age, and the loan will continue to age until it falls off your report in 10 years (or 7 with bads)
What happens is loans have an analog to credit card utilization. Active loans get a significant score boost below 9.5% remaining balance. When you finish your loan there is no penalty you simply stop getting a bonus. I know some might say that is semantics but it is not. Depending on your remaining balance it is possible your score will increase paying a loan from a very high remaining % of balance in relation to starting amount to zero.
Geez, just when I was confident in going to bed last night thinking I had all the bases covered with the whole etc, etc...thing. I wake up to find out that sadly, I was mistaken. To be clear, the intention of my post was to say in essence 'hey @DoogieBall, no matter what cockamamie antecedents may exist, it's a bummer your scores took that kind of massive hit, I can relate and my condolences, but never the less, good for you for paying off the loan'.
While it's true you do get a boost in your score (and we're talking about FICO8 here) when your balance goes under 9% (I think 8.9% is the widely accepted threshold), I find it highly unlikely, and think we can agree, that Mr. or Mrs, or Miss @DoogieBall got a 58, 60 and 64 point bump, or bonus in their scores at that moment in time. If I had to guess, I'd say it was more in the 30+- range. with that said, it would also have to be considered that their scores also increased as the % of loan balance diminished over time until said time it was paid in full, as there are other factors involved during that time as well, such as their file/other accounts aging further, other account balance factors, etc, etc...
Perhaps they will chime in and let us know what kind of score bump they initially got (if they noted it) so that future generations of MyFICOers can have more DPs to consider as further evidence, or pontificate, whatever the case may be. Regardless, It's been pretty well documented, and widely acknowledged on these threads that there is strong evidence to substantiate a FICO penalty exists for having no open installment loan, just as there is a penalty for having 0 balances across all open revolving accounts. If you have data to the contrary, by all means, please share it as it would greatly benefit the community.
To quote a famous member of this community, "Every so often, Fico apologists throw in their "datasets", "research showed", "aliens", but it's all just gobbledygook". In the end, the massive score hit is a huge disappointment no matter how you slice it.
I agree it is a huge disappointment, it should be a bonus you successfully paid off a years long committment. I was simply referring that the loss is not from credit mix or history, and my example of loan balances being an analog to credit card balances was to explain the why and how of a point loss for a zero balance, I see so many post where people believe a closed/paid account disappears into the ether seeing anything that remotely looks like they are implying that gets the auto response. At the end of the day the loss of a bonus and a penalty for the average user makes no difference, my main point was the change is from how utilization is factored not a loss of credit mix/history. Even saying the penalty is from no open installment is just another way of saying changes in utilization.
I agree, as well! You should be very proud paying off the loan 6 months early! I've been paying down my Auto Loan with a bit extra off of the principal each month and now I'm a bit disappointed to know how my score will likely take a dive because of it.I agree it is a huge disappointment, it should be a bonus you successfully paid off a years long committment.
This is interesting. I built my score from 590 to 816. Around 805 or so I bought a car. It grew to 816 over time. After 2 years out of the 5 year loan I traded it in and got another car so I still have an open loan...
Are we saying that when I pay this off, I may get hit with a 30-60 point score drop? Mine didnt increase more than a few points and to be honest I think it was more to do with inquiries dropping off than it was to do with the car loan.
