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Auto Loan paid - Fico 8 drops, Fico 9 increases 🤔

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Regular Contributor

Auto Loan paid - Fico 8 drops, Fico 9 increases 🤔

A quick DP for anyone keeping track of differences between Fico 8 & Fico 9, and perhaps those looking to pay off an auto loan and curious as to what the effects on their score might be.

i opened an auto loan last year and finished paying it off recently. The original balance was for ~$16,000, and the loan was open for 366 days before I paid it off and the account was closed. It was through Ally financial, and they reported the closing at the end of last month. When that happened, I received updates to both my Fico 8 and Fico 9 scores.

The EX, TU, and EQ Fico 8 scores dropped by 8, 1, and 2 points, respectively.

The strange part is that my EX Fico 9 score increased by 6 points when it reported on the same day. My Fico 9 scores had been increasing steadily by 4-5 points each month for a few months, so it’s possible that this is just a part of that trend, but that implies that the closed auto loan did not negatively affect the Fico 9 score, whereas it did for the Fico 8 score.

I still have 4 open installment loans and 7 other open accounts, so the drop shouldn’t be as a result of no installment loans or lack of # of accounts... it seems like the auto loan has a certain weight in Fico 8 that may not exist in Fico 9.

Hope these help 😅
4 REPLIES 4
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Super Contributor

Re: Auto Loan paid - Fico 8 drops, Fico 9 increases 🤔

What you need to look at is your overall installment loan utilization just before the auto loan was closed and then what it was after that loan reported closed and is eliminated from the equation with only your other 4 installment loans left.

 

If your installment loan utilization stayed the same or increased, your scores could stay the same or decrease.  If your installment loan utilization stayed the same or decreased, your scores could stay the same or increase.

 

If you're seeing the opposite happen, like your installment loan utilization decreased and your scores also decreased, it means something else changed on your report. 

Message 2 of 5
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Senior Contributor

Re: Auto Loan paid - Fico 8 drops, Fico 9 increases 🤔

When my new loan hit, v8 increased v9 decreased.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/New-loan-awards-quot-clean-aged-thick-no...
For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.



RIP:






Scores updated May 2020, unless otherwise noted. 5 revolvers reporting a balance, where it's normally 1, but took an HP on EX.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 3 of 5
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Regular Contributor

Re: Auto Loan paid - Fico 8 drops, Fico 9 increases 🤔

Pretty sure nothing else changed on my report - but I did do the math on the new utilization ratio on my remaining loan balances, and I believe that BBS is correct. Whereas my utilization % was in the 50% range with the auto loan open, with its closure the % recalculated to 67% - and I believe the threshhold for gaining/losing points is 65%? If that's true, then that explains why the score fell so much. It probably dropped a few points from closing the account, but dropped even more from the new utilization ratio. 

 

That being said, I am not sure how that works when we factor in the fact that the EX and TU scores didn't move that much (the TU score recently increased by a few points, actually). That theory also implies that the Fico 9 score is also unaffected by that 65% threshhold. Interesting. 

Message 4 of 5
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Senior Contributor

Re: Auto Loan paid - Fico 8 drops, Fico 9 increases 🤔

I don't think the exact threshold has been found, though I've read it is believed to be between 65-73% or something like that.

I've had some weird anomalies among bureaus, sometimes they weigh stuff differently. V9 was supposed to lessen disparity.
For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.



RIP:






Scores updated May 2020, unless otherwise noted. 5 revolvers reporting a balance, where it's normally 1, but took an HP on EX.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 5 of 5
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