Not understanding large drop in FICO

[Anonymous]

3 months ago, when I applied for and received a personal loan from my bank for an auto purchase, my credit score was 650.  I've had no derrogatory reporting since that time.  I did apply and was turned down, however, for a Sallie Mae student loan just last week.  Today, my credit score is 590.  How did I drop 60 points?  Is the drop related to the inquiries and the one new loan?  How can I regain these points?  How long does it take your score to recover from hard pulls?  Would it help to pay down the new auto loan to under 50%?  That is something I have the funds to do.  The reason I ask is that I need to refinance my mortgage (balloon payment due in February) and have to start on that no later than December 1.  I desperately need to recover from whatever has happened here.

I'd really appreciate any help I can get here.

[llecs]

OP, were the 650 and 590 pulled from the same source (e.g. lender, myFICO, etc.)

[Anonymous]

I'm not at all sure what souces were used.  I'd have to check into it.

[llecs]

Or in other words, who gave you the 650 (e.g. was it a lender? Did you pull that from a service? Did it come from myFICO?, etc.) and who gave you the 590?

If you got the two scores from different sources, then one of two things might be happening to explain the difference: 1) one score is a FICO and the other isn't, or 2) both scores are FICOs but both are different FICO versions. Or maybe both came from the exact same source. If that's the case, you'd want to narrow out any differences. FICO scores can change daily and oyu'd want to look for differences in the reports.

[Anonymous]

The 650 was pulled by the bank 3 months ago when I applied for the personal loan.  The 590 was pulled by the company I approached this week to help me with the refinancing of my home, so both valid reports, I'd assume.  The mortgage company has given me a copy of my report that was pulled yesterday.  There's absolutely no recent "dings" (late pymts, charge offs) that would explain this.

[Anonymous]

Additionally, the mortgage company pulled all 3 reports and state that Transunion is the score that will be used.

[luckelle]

baffled1, it should be very possible to have around that drop. consider the new auto purchase. if not much money was put down, your talking 100% installment left to be paid on your trade line , first. Two there was a credit pull by a mortgage company. From what i understand the fico system calculates you having aquired a new mortgage loan. in effect it looks like you have brought on major additional dept. It should balance out after a month or two when no new mortgage trade line pops up. this all based on the fico formula that was used by the auto or mortgage company ie, tu08, 04, etc. If you have six month to wait I wouldnt worry much since you have no baddies that popped up. if the 590 is correct i might have to consider paying down the auto loan in a time crunch like refinancing. Any Hoo. God speed to you!

[Anonymous]

I'll definitely pay down the auto loan, if not in full.  The sad thing is that I borrowed this money to establish a different line of credit on my report, hoping to improve my profile.  Previously, I'd only been in debt for my mortgage/2nd mortgage, no credit cards or lines of credit, etc.  FICO is a horse of a different color for sure.  I don't quite understand why it's the be all, end all of your credit worthiness.  I have 50% equity in my home, excellent debt to income ratio, and no late pays on my mortgage/2nd mortgage in 8 years time and I'm fighting for a refinance.  Can't believe it!

[luckelle]

oh!!! (light bulb) You stated you have no credit cards. Note if you read in the credit forums. if you have a lot of installment credit but not enough credit limit credit ie. credit card, to balance out you portfolio. Thats is not very good when you need to gain more credit in time or in your case another loan. The fico system determines that if you default on any of your installment loans you will become more risky. Simply stated, you may be safe with your morgage and auto , but have no other credit to balance you if the installments go bad. If that is clear enough, I hope!

[Anonymous]

Yeah the problem is not having any credit cards. Your best method is to apply for one of the capital one cards or something that are low requirements, like the cash rewards green card. If that score is too low to get any regular credit card, pop open a secured card.