Auto loan paid off Fico score went down?

Anonymous · ‎02-18-2022

Can someone help me to understand why would paying off an auto loan in full ahead of the scheduled end of the loan maturity might cause your Fico score to go down?

thornback · ‎02-18-2022

Was this your only active loan?

If so, FICO penalizes for having no active installment.

If not, then paying off this loan may have increased your aggregate loan utilization (util of all active loans combined), which could decrease scores if a utilization threshold was crossed.

Congrats on your payoff! Finances over FICO.

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SouthJamaica · ‎02-19-2022

@Anonymous wrote:
Can someone help me to understand why would paying off an auto loan in full ahead of the scheduled end of the loan maturity might cause your Fico score to go down?

It could be because you have no other open loans, so you are experiencing the 'no open loan' penalty.

Or, if you do have other loans, it could be because paying off a mostly-paid-down loan increased your aggregate installment utilization percentage.

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disdreamin · ‎02-19-2022

The irony is that even immediately opening a new auto loan won't restore those points unless you can also immediately pay it down to around 9% or so. It's odd, but I guess the good news is that DTI looks more attractive even if some of the FICO scores take a bit of a hit. I think I lost about 20 points or so on FICO 8's across the board when I paid off my auto loan off a couple years early.