I lost 21 points on my Experian FICO 8 when I refinanced my private loans last month. Went from like 88% total loan utilization to 94% and the old account was at 80% and 2.5 years age.
Not sure how much impact it'll be from naturally paying them off and them falling off your report over time though.
Not sure how much impact it'll be from naturally paying them off and them falling off your report over time though.
as of 2/22/26
@ccquest wrote:
I lost 21 points on my Experian FICO 8 when I refinanced my private loans last month. Went from like 88% total loan utilization to 94% and the old account was at 80% and 2.5 years age.
Not sure how much impact it'll be from naturally paying them off and them falling off your report over time though.
You also reset your AOYA and reduced your AAoA when doing that, which could both reduce your score.
Installment loans are counted in aggregate - and the only strong breakpoint reported is below 9%, so paying them off individually might upset the utilization in that regard, but won't effect your scores otherwise. I think there have been reports of stronger breakpoints with regards to utilization in mortgages, but since I don't have one, I admit I haven't bothered looking into it more. I can say that I strictly watch the individual and aggregate utilizations of my loans and haven't seen anything significant yet (I was hoping - SL is at 48%, Auto is at 73%, Aggregate is at 59.8%). I keep hoping to see an interesting bump - next month has be below 58.9% agg, so I can probably look forward to another disappointment 
.
The accounts still count towards aging factors if closed (up to 7y if derogatory and 10y if positive), so there wouldn't be a score change due to the closure itself.
It was the only change on my credit report at the time. The youngest account before then was the 3 new credit cards that had reported already so AoYA wouldn't have changed much either. The inquiry was on EQ so it wouldn't have been the delayed affect of that either. So I'm thinking it's something around the 89% mark, for me at least.
@Anonymous wrote:I've heard that paying off some loans or even all loans can actually drop your credit score.
As for me so far I've had good experiences. I paid off the last of my unsubsidized loans last month and I actually got a slight boost (up 3 points).
The bulk of my loans are the subsidized ones though (still about $120K left!). I have 8 left and believe the bear strategy is always just to work on the one with the highest interest rate first.
You are thinking of the credit mix penalty. It only applies when you no longer have a loan of that type. All student loans are of the installment type so as long as you have one of those you will get those points. The other aspect is that the loans can have a long period where they were open. For student loans we are talking 10-20 years which is almost the same as a mortgage of 15-30 years. As soon as the loan it is paid off it will also close so the history length of open accounts will shorten drastically. I personally recommend paying the minimum first, then any extra funds go to the account with the highest interest rate but also lowest balance at that rate. The reason is that once that account is paid off the minimum for it will no longer apply so the monthly payment will go down for the remaining loans. Then you will have the extra funds to either keep or reinvest into paying the other debt off.
Correct, paid off individual loans which resulted in a credit score drop. Don't forget, the best debt is no debt. Scores don't bother me as much.
@importxpresions wrote:Correct, paid off individual loans which resulted in a credit score drop. Don't forget, the best debt is no debt. Scores don't bother me as much.
Close, the best debt is the one at 0% that you can fully pay off with interest accruing funds on hand after paying off all the other obligations. Your version is the second best type but it is a pretty good one too.
