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Just Paid Off My Auto Loan, Took A 50 Point Hit!

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Established Member

Just Paid Off My Auto Loan, Took A 50 Point Hit!

I just paid off my car loan (last month) a year early because I couldn't stand the payment anymore. So I just checked my score and it went from 830 to 780. The only credit on my report now is the $169 I owe Discover, all other cards are $0 balance (4 cards) and no more open loans. How long before my score bounces back?

Message 1 of 13
12 REPLIES 12
Senior Contributor

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

They won't bounce back.  An installment loan open and between $1 left to pay and 8% gives you maximum FICO points 

 

This is why so many of us did the SSL Technique while it was still around.

 

As your oldest account ages way more (years and years) you'll gain points back.  But not 50 points instantly unless someone finds a new SSL to app for.

Message 2 of 13
Valued Contributor

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

FYI: I saw a post here about a week ago about a new SSL someone found. I think it was through America First Credit Union.

I'm not in need of an installment so I didn't read all the details, but there's a thread. I believe the poster mentioned minimum $550 SSLs.

OP: Sorry for your loss.
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Message 3 of 13
Established Contributor

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

We unintentionally had that happen to us too. Got a loan, after three weeks changed cars through the same dealership (long story). End result first loan at CU closed, new loan opened. FICO drop from first loan 11pts, second FICO drop from closing and opening second loan for same exact amount of money, 48pts. Lost 59pts all together. almost a year later and still hasnt bounced back. Lesson learned.

 

Weird thing is it was a joint loan and my FICO didnt take that big of a hit, mine was only about 30pts total. Since it was my car i feel bad it dinged DH so much.









Message 4 of 13
Established Contributor

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

I wonder what the startup cost is to become a bank that only offers secured loans with front end repayment.  I'd offer 80 month terms for a reasonably low percentage.

Message 5 of 13
Established Member

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

Well inching up. I just got my score on my Amex card for this month and it went up 22 points. So from 830-780-802. That puts me back in the excellent range from very good.

Message 6 of 13
Super Contributor

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!


@ron56wrote:

Well inching up. I just got my score on my Amex card for this month and it went up 22 points. So from 830-780-802. That puts me back in the excellent range from very good.


That is certainly good news.

Message 7 of 13

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

Bumping because this scared me Smiley Sad

 

I am about to pay off my auto loan and it is the only installment loan I have currently. I was hoping to change my car shortly therafter but now I'm worried that I'll face a steep loss.

 

The idea of losing 50 pts is terrifying. I am already on the cusp (699 FICO, 720 Auto) and need all the points I can get because I want to lease and need to stay above 700.

 

Is it worth it to take out a small installment loan elsewhere just to have one on my report? 

Message 8 of 13
Frequent Contributor

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!


@800visionboard wrote:

...

The idea of losing 50 pts is terrifying. I am already on the cusp (699 FICO, 720 Auto) and need all the points I can get because I want to lease and need to stay above 700.

 

Is it worth it to take out a small installment loan elsewhere just to have one on my report? 


The idea behind a SSL is to pay minimal interest while gaining the benefits of an active installment account.  You can easily maintain a 20+pt bump for years if you can find an institution that will structure loan payments favorably, and pay less than $30 worth of interest. 

 

As for whether it is "worth it" that is up to you.  I think so, and went through the trouble of getting a $5k loan so I could stretch it out for 5 years, and will pay less in interest than most people do for a month worth of coffee or cell service.  Despite what ABDC has said, it is still possible to get loans that will work for this purpose, although they may not be easy to qualify for, or may require more interest or fees to be paid -- but if that small amount will save you thousands in interest on a larger purchase, it seems silly not to utilize such a tool.

 



Message 9 of 13
New Member

Re: Just Paid Off My Auto Loan, Took A 50 Point Hit!

Well here I am 14 months after I started this thread so I mind as well update. My credit circumstances are exactly the same as when I started this thread (no new loans, 1 new card, no new debt ) and it seems like my score has topped out at 810, which I hit in Sept. So I went from 830 to 780 and crept up to 810 in 8 months. BTW I am on a new computer and somehow I had to create a new account because I couldn't remember my password, but I am the thread starter.

Message 10 of 13
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