@niceassets wrote:Thank you. I understand what you're saying, it just seems strange that my score would suffer as the result of successfully paying off a loan. Will this correct itself in time or is there something I can do?
Financial health does not always equate to better scores. In fact it often seems counterintuitive. Paying all your credit cards to zero is good financial health. However, FICO see's it as not using credit, therefore cannot predict how responsible you are with CC debt as it's not trended data. You will take a hit on your scores.
Same with credit mix as it's part of the FICO pie. Not having something that satisfies the credit mix could ad usuually does cause a reduction in scores. Absent an installment loan removes available point for satisfying that piece of the pie.
But unless you need to app for something or need to use your scores for a reason, you didn't do anything wrong. Paying off a mostly paid or only instalment loan, FICO reacts with a decrease. It's just the way it is.
Now the new FICO 10T may treat it different when implemented (likely many many years down the lines as FICO 9 has not taken over FICO 8). This current health crisis may speed the implementation up, who knows. That new score uses trended data and will be the new beginning of many topics in this forum in a decade or so (just my opinion regarding when)
@niceassets wrote:On APR 11 my auto installment, which has no late pays, was marked as satisfied - paid in full, on my Experian report.
The same day my score dropped 11 pts. I called Experian and they said this happens. Fully satisfying a loan does not automatically mean a score increase... I said W T F is that nonsense?!?! You pay a loan off in full with no late pays and you get a score D E C R E A S E ??? LOL
Hopefully someone here can help shed some light on how that makes any sense whatsoever.
Thanks in advance.
In order to tell you what happened, we would need to know if this was your only open loan, and if not what the balances and original loan amounts were on this loan and the other(s).
@niceassets wrote:It was the only open loan, had no late pays, and had a balance of about $1,400 prior to paying it in full. It now seems like I should have just kept the loan open and kept paying monthly. Live and learn.
I have a fairly thin file otherwise, with one card ($0 bal, low CL) and a SelfLender (Self) account, both with excellent payment history.
The only negatives are 2 old derogs,/collections... and I'm working on those PFD.
You still have a installment loan. Dont need another. If the other loan was the only one. It would have been more than 20+ pts lost after PIF.
