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Paid off 2 Cars Loans Fico Dropped 28 points now what?

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Regular Contributor

Paid off 2 Cars Loans Fico Dropped 28 points now what?

Maybe someone can shine light?

 

MyFico score was doing great and then this afternoon MyFico score dropped down to 671. My question is this... I traded wife's car in on another car. Dealer paid her car off Fico dropped 14 points.... I traded my car in did the same thing dropped 14 points. This all occured almost around the same time.  Now.. it shows both loans paid off. But it's not showing the 2 new cars that were purchased with the trade in's. Will this also drop the score again once the 2 new cars show up?

 

I have a great relationship with American Express Silver and Gold. Never missed a payment and pay both cards off each month. I don't want to lose my credit with Amex lowering the $9,000 down to a lower amount due to the score drop. I'm going to pay about $5,000 more toward all my other credit cards to help balance things. Or I hope it does.

 

It bothers me that one can get pentalized for paying off a vehicle. Can someone please help with the above questions?  Thank you very much! Stressed out to say the least. Help would be so much appreciated!

Message 1 of 12
11 REPLIES 11
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Established Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

It's hard to say without knowing more about your profile and even then it's very difficult to project. But I would venture to say yes it will drop your score again based on AOYA and reducing your AAOA. Furthermore your installment loan utilization will start over. 

Started 6/6/2018 EX - 588 ; EQ - 667 ; TU 575

Updated 12/2018


Message 2 of 12
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Super Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

It depends on quite a few factors really as to whether or not your score will drop further when the new accounts report.  You'd gain some points back for again satisfying "credit mix" but would could lose points from the inquiries and age of accounts reductions.  Overall, it may be  a wash and if not, likely just a few points swing in either direction.

Message 3 of 12
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Regular Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

Good thing is that the credit inquires have come on since the 2 car purchases. I'll update everyone in the weeks coming or sooner to let everyone know how this roller coaster ride ends. I just don't want to lose American Express, not lose but have them lower my available credit.

Message 4 of 12
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Established Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

Amex lowering your Express bc you purchased vehicles...HIGHLY unlikely but I guess there is always the 0.01% chance IT could happen! 

Started 6/6/2018 EX - 588 ; EQ - 667 ; TU 575

Updated 12/2018


Message 5 of 12
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Regular Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

I don't think that American Express would lower the credit but I wasn't sure if the score could effect due to it dropping so much on the Fico.

Message 6 of 12
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Community Leader
Super Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

OP
If this was the only installment loan on your CR, the drop is understandable so once the new installment loan is added, I think you’ll gain some of those points back.

And I don’t think AmX will reduce your CL unless something else is going on in your credit profile. That’s good you’re paying $5K to reduce UT on other accts.


DEC 2019: EX 816, TU 820, EQ 810
DEC 2018: EX 777, TU 783, EQ 799
DEC 2017: EX 775, TU 778, EQ 769

|| NFCU CashRewards $30K || AmX Cash Magnet $30K || Discover IT $22.2K || Macy's $20K || NFCU CLOC $15K || NFCU Platinum $12.5K || AmX ED $11.5K || CitiCostco $7K || CitiDC $6.3K ||
Message 7 of 12
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Super Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

CLDs that come as a result of profile changes 99.9% of the time come from two things... I'd say 90% of the time it's because of the introduction of negative information to a file, as that's the #1 sign of increased risk in the eyes of anyone looking.  The other 10% of the time it's due to extremely high utilization over a long period of time, which is the #2 sign of risk and the biggest reason that could lead to #1 happening. 

 

Any other events outside of those things like a couple of new accounts, accounts closing/dropping off your CR, inquiries, etc. are all very minor changes and rarely impact risk much, thus their impact on score changes is minimal.  That being said, those minor score fluctuations and CR changes are almost never going to result in AA by a CCC.

Message 8 of 12
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Valued Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

I don't think you have anything to worry about from Amex, this is normal everyday behavior for people who trade in vehicles. Small drops in scores for such actions aren't typically a red light to CC issuers. They get skittish when you take on large CC debt load, and only pay the minimums. 






Message 9 of 12
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Valued Contributor

Re: Paid off 2 Cars Loans Fico Dropped 28 points now what?

Its not paying off the loans that lowered your score. Its the credit inquires that dealer/bank ran to give you the new loan.

Message 10 of 12
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