Credit Scores dropped after Paid Auto Loans Reported

[The-Credit-Disciple]

Good evening Fico Fam !!!

My Fico scores dropped by 13 or more points today after our  Paid auto loans reported today.

Previous Fico scores 3 days ago was: Ex 650, Trans 715, Eq 706

Today Fico scores after Paid auto Loans reported are: EX 643   Trans 702   Eq 689

I am trying to understand why my scores took a hit like that?

I currently still have installment Loan(Self Lender). I have not miss a CC Payment , How can I get my scores back up?

Thanks in advance

[Anonymous]

Tell us what your loans were just before you paid the loans off.  List all of your loans.

Loan 1.  Balance = ____   Original Loan Amount = ____

Loan 2.  Balance = ____   Original Loan Amount = ____

Loan 3.  Balance = ____   Original Loan Amount = ____

Then indicate which loans were paid off.

After you give us that info we can walk you through why there was a score drop.

PS.  When do you expect the SelfLender loan to get paid off?

[The-Credit-Disciple]

---

@Anonymous wrote:

Tell us what your loans were just before you paid the loans off.  List all of your loans.

Loan 1.  Balance = ____   Original Loan Amount = ____

Loan 2.  Balance = ____   Original Loan Amount = ____

Loan 3.  Balance = ____   Original Loan Amount = ____

Then indicate which loans were paid off.

After you give us that info we can walk you through why there was a score drop.

PS.  When do you expect the SelfLender loan to get paid off?

---

Loan #1  Balance was $1219,  Original Car Loan amount was $22, 500   72 month Term payed it off 2 months early

Loan#2 Balance was $ 14,421 Original Car Loan amount was $21, 975, 72 Month term payed it off 3 years early

Loan#3 Self Lender balance is S100, Original Balance was $550  only 2 months Left.

Hope this helps, Thanks 

[Anonymous]

I am surprised your scores dropped. 

Your total debt / original amount of all loans prior to payoff was:

      15740  /  45025  =  0.35%

Your total debt / original amount of all loans after payoff was:

       100 / 550 = 18%

It should not have dropped. 

You will find that your score will go up just before your SL loan is paid off (in the last month).  Then after it closes you will likely have a score drop of 30 points.

You can prevent this ny implementing something called the Share Secured Loan Technique.  Do you have anyone in your extended family who served in the military?

[The-Credit-Disciple]

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@Anonymous wrote:

I am surprised your scores dropped. 

Your total debt / original amount of all loans prior to payoff was:

      15740  /  45025  =  0.35%

Your total debt / original amount of all loans after payoff was:

       100 / 550 = 18%

It should not have dropped. 

You will find that your score will go up just before your SL loan is paid off (in the last month).  Then after it closes you will likely have a score drop of 30 points.

You can prevent this ny implementing something called the Share Secured Loan Technique.  Do you have anyone in your extended family who served in the military?

---

Does it help that I have a Personal Loan of $20,000 that just reported? that will be a 60 month Term

[Anonymous]

So it sounds like there were at least four loans involved.  Could there be more?  A fifth loan perhaps?

What we need is a list of all the loans and the events surrounding each.  I am guessing that there were the three loans you gave me.  They had the balances indicated.  The fourth loan had not yet reported. 

Then you paid off two of the loans.  Immediately after the two loans reported as closed there was a score drop.  Had the fourth loan reported yet at that point?

Are there more loans still undisclosed?

The bottom line is that FICO 8 likes it when you have open loans which are mostly but not entirely paid off.   In a few months you will have one open loan on which you owe almost the entire amount.  Expect to see a score drop compared to having loans that are partly or mostly paid off.

You will get about 30-35 points over time if you can have your loan mostly but not entirely paid off.

[pipeguy]

I carry a mortgage, various revolving credit cards (balances are mostly 0%) and 2 car loans. Historically every time I pay off a car loan my scores drop 15-20 points, even though the other car loan is still open (installment). When I replace the car loan with a new one my scores go up 15-20 points. Personally, I've never seen a plus or minus in my scores for the balances carried on mortgages or installment loans (aka utility) so in my experience "utility" is a major factor in revolving credit but pretty much a non-factor in mortgage/installment loans unless the balance is zeroed out.

Note that I've had quite a few mortgages and a whole lot of vehicle loans over the past 40+ years. 

[NeverGivinUp]

I feel your pain! In July we paid off our car loan, not early-not late. We were in re-build as it was & Scores dropped more then 60 Points! We only had 1 other installment loan & our scores were finally starting to increase. I feel like we're starting over now & didn't necessarily want/need to but since then we've gotten 7 more TL after all the great information we've received here.  We now have a better understanding. Scores have increased about 40 pts. but not all TL have reported.