You need an open installment loan for credit mix. With no installment loan you lost the points for credit mix.
Unfortunately it does sound like you just went from having a substantially paid loan to no open loans at all, and credit mix is a major scoring factor.
Where were your FICO scores prior to and after this change? If you need the points, you can always look into a SSL from a credit union that will cost you very little and get the credit mix points back. If your scores aren't affecting your current credit accounts and you are not applying for anything in the near future, it's not as much of a concern. You can still have excellent credit scores without having open loans. It just takes time and means you need to be diligent about utilization and payment history on revolving accounts.
@Anonymous wrote:Hey there- recently I've been working incredibly hard to up my credit score. I've paid back old debts - paid off all of my CCs - and PFD many of my older CAs. I recently paid off a car loan that I have had for 4 years. Today I got the notification from Experian which said:
"Well done! Your loan is reported paid with a zero balance. This activity may positively impact your credit score."
the next notification I received was my credit score update :
"Your FICO score has decreased 32 points"
ive had absolutely nothing else happen that would cause that to happen. It's just the ultimate gut punch and I have no idea why this happened. Any thoughts ?
1. As others have pointed out, you can lose points when paying off your only open installment loan. In FICO 8, the 'sweetspot' for installment utilization is where your aggregate of open installment loans total 9% or less of the original loan amount(s). In that region you're getting credit for the 'credit mix' and for having the loan(s) mostly paid off.
2. This can mean major points in your FICO 8 and other recent model scores, but has much less significance, if any, among the older scoring models -- e.g. the all important mortgage scores. While you took a big hit in FICO 8, you probably haven't lost any points in your mortgage scores.
3. As @K-in-Boston advises, I wouldn't worry about it, but if you wanted to regain the points in FICO 8 the easy way to do it is to take out a share secured loan from a lender like Navy Federal Credit Union, then immediately pay it down to 9% or less, then pay it off slowly for the rest of the term.
@Anonymous wrote:That's your FICO punishment for being debt free. FICO absolutely hates people who are debt free. I lost 60 points when I paid off my mortgage and another 40 when I paid off my car two months later. Zero debt and $1500 more in disposable income and my score went down 100 points. Solution - you need debt, lots of it. Quick - go out and get 5 credit cards and 2 installment loans and FICO will love you again, but is it really worth it? That's what I did and now 2 out of 3 of my scores are over 800 and the other is 797.
Debt is not needed for a good FICO score. Accruing a lot of debt is a good way to not have a good FICO score. FICO scores and other credit scoring systems measure your risk of defaulting on a given lending product in the future. If you are not using credit, it stands to reason that you are a higher risk than someone who is currently responsibly handling debt. With decades of responsible credit use, it's possible to have very high credit scores with a single credit card that you only buy a bottle of water on once a month and pay the statement balance in full avoiding any interest.
Completely dropping off of the credit grid does not show that you can currently resposibly handle lending, it merely shows that you did in the past, and eventually those positive credit lines will fall off of your reports. Having an installment loan and 3 or more revolving credit cards is not required for a good credit score, neither is carrying debt, but having these accounts is a shortcut to attaining higher scores when someone has a blemished record or is new to credit.
I absolutely agree that FICO scoring benefits you with debt. However lot's of it is not required. I also absolutely believe it comes across as counter intuitive, but it is what it is.
Debt Free most likely wont = great FICO scores. I'm not going to defend the methodology, but without debt lenders can't assess if you will pay debt responsibly, so they think. It sucks, but kind of makes sense. I personally hate it as you'd think no debt looks good but it is what it is and I "kind of" understand, although the end result is you must be in some debt. Less than $100 will usually due in my opinion.
I'm unaware of any way to be debt free and get a "great score", but this forum provides plenty of information on how to get great scores without being in great debt. Scores only matter if you need someone to lend you money, which means you likely can't or wont pay for whatever you want in full.
I often see post where people chase scores. I did and to a lesser degree, still do. If you don't need credit, be debt free in my opinion. But it you need credit unfortunately you'll have to play the game. Best place to learn how is here.
And unfortunately(?) good/great scores can provide other benefits outside of lending.
"Great" is subjective. 
@Anonymous wrote:That's your FICO punishment for being debt free. FICO absolutely hates people who are debt free. I lost 60 points when I paid off my mortgage and another 40 when I paid off my car two months later. Zero debt and $1500 more in disposable income and my score went down 100 points. Solution - you need debt, lots of it. Quick - go out and get 5 credit cards and 2 installment loans and FICO will love you again, but is it really worth it? That's what I did and now 2 out of 3 of my scores are over 800 and the other is 797.
Your scores seem to have stayed above 800 for the better part of 2 years?
When was the mortgage and car loan payoff that led to the score declines?
To what do you attribute your recent 800+ scores? Did you find another route to credit mix?
