Hello -
I am aware that if you have ONE installment loan and pay it off, leaving you with nonem, this will drop a score significantly, but I had TWO installment (auto) loans, paid off one of the two, and still experienced a rather large drop. It was not the 25 to 30 point drop that most report, but still around 20. Is this because the paid off loan was the loan that was under 9% and the other still remaining has quite a bit of the loan remaining (66%)?
Second question, will getting an SSL help correct this drop WITH the other installment loan still active, or would it generally be a wash?
Starting Score: 605, 566, 573
@NMT252 wrote:Hello -
I am aware that if you have ONE installment loan and pay it off, leaving you with nonem, this will drop a score significantly, but I had TWO installment (auto) loans, paid off one of the two, and still experienced a rather large drop. It was not the 25 to 30 point drop that most report, but still around 20. Is this because the paid off loan was the loan that was under 9% and the other still remaining has quite a bit of the loan remaining (66%)?
Second question, will getting an SSL help correct this drop WITH the other installment loan still active, or would it generally be a wash?
Only if the payoff brought your aggregate installment utilization to above 10% from below 10% (which doesn't sound likely from what you have described) would it have cost you points.
No, adding an SSL would not help.
@NMT252 wrote:Hello -
I had TWO installment (auto) loans, paid off one of the two, and still experienced a rather large drop. It was not the 25 to 30 point drop that most report, but still around 20. Is this because the paid off loan was the loan that was under 9% and the other still remaining has quite a bit of the loan remaining (66%)?
several people have reported this, not sure what it is honestly as @SouthJamaica said, utlization wise, going from ~35% to ~66% aggregate installment utilization shouldn't have caused such a sharp drop
perhaps it's a profile thing, perhaps it's aging metrics, perhaps a combination of a ton of smaller metrics that come with the account closing. Is the 66% loan much newer than the one that was previously closed?
The paid off auto loan (Capital One) was a 5 year loan, originally 27k and was opened in 2018.
The other auto loan (Hyundai Motor Finance) still open - is a 6 year loan, originally 39k, opened in 2020, and has a 26k balance.
The FICO alert for the 20 point score drop clearly attributes it to paying off the auto loan saying "Closed or paid installment account / zero balance" with second descriptor saying "auto"
The HMF loan is at 66% but I'm still surprised with an active auto installment loan to see such a big drop.
@NMT252 wrote:The paid off auto loan (Capital One) was a 5 year loan, originally 27k and was opened in 2018.
The other auto loan (Hyundai Motor Finance) still open - is a 6 year loan, originally 39k, opened in 2020, and has a 26k balance.
The FICO alert for the 20 point score drop clearly attributes it to paying off the auto loan saying "Closed or paid installment account / zero balance" with second descriptor saying "auto"
The HMF loan is at 66% but I'm still surprised with an active auto installment loan to see such a big drop.
There is not necessarily any connection between the substance of the alert, and the score change tacked on to it.
MyFICO alerts don't provide reasons for a score change. There are certain events which trigger MyFICO alerts. If there happens to be any difference between your present score at that particular bureau and the previous score reported to you from that bureau, the score change is tacked on to the alert. There is not necessarily any connection at all between the score change and the alert substance.
MyFICO explains this as follows:
Why did my score go up when I got an alert for something negative (or why did my score go down when I got an alert for something positive)?
The short answer: Your FICO® Score may change because of other events not monitored by an alert.
Whenever we send you a credit alert, we also send an updated FICO Score. To ensure you get the most current score, we calculate it based on your entire credit report at that point in time—not just the new information on the alert. This means your new score may reflect other changes that are outside of the things we watch for (see everything we monitor).
Sometimes you may see your score increase when you think it should’ve decreased, and vice-versa, but you’ll always have your most up-to-date and accurate score.
https://support.myfico.com/hc/en-us/articles/360038084633The substance of the alert and the alert are not necessarily related.
That explanation makes some sense, but I guess I just assume that the score changes (all drops) on each bureau were from the auto loan payoff simply because nothing else significant has changed at all recently.
I guess I just have to look at it as there's no clear answer why the sudden drop, or whether or not it's related to the auto loan payoff.
@NMT252 wrote:The paid off auto loan (Capital One) was a 5 year loan, originally 27k and was opened in 2018.
The other auto loan (Hyundai Motor Finance) still open - is a 6 year loan, originally 39k, opened in 2020, and has a 26k balance.
The FICO alert for the 20 point score drop clearly attributes it to paying off the auto loan saying "Closed or paid installment account / zero balance" with second descriptor saying "auto"
The HMF loan is at 66% but I'm still surprised with an active auto installment loan to see such a big drop.
Just as a side note, not a recommendation.
My daughter got a Kia with Hyundai/Kia financing.
Wanted to push extra payments and they pushed out the loan time, said no money due for months. If you have funds and want to save interest but still keep an active loan, Hyundai auto use to be just like an SSL. You can test and see if they still do the same, just push a couple payments worth and look at the next statement. Her loan was paid off 5 years ago, but might be worth testing. 