Can't win for losing.....

[pipeguy]

Paid off my current car note (at 31 months on a 72 month loan) mainly because I'll be getting a new car (loan preapproved by DCU) and I'm underwater on the old one because of high mileage (91k in less than 3 years).  Note that I still have another car loan through DCU on the DW's car thats just over a year old. 

Equifax score lost 11 points, Experian lost 3 (nothing from TU yet) - my EQ score was my highest and my EX score is my lowest because they continue to incorrectly list an equity loan as foreclosed, when it never was (it was converted into a set payment, set interest rate, second mortgage) - I've disputed it over and over and short of suing them, I just live with it.

My scores were and are in the mid-700's so I can afford the lost points, but I find it kinda strange that 2 installment loans score higher than having an installment loan in the mix which would be my other car loan. I sill have revolving (lots of accounts, under 3% utility), a first and second mortgage and an installment loan (car note), but somehow TWO car notes are better for scoring even though installment utility would be much higher and over all debt would be higher.

Update TU - 7 points

Go figure 

[Thomas_Thumb]

A score drop under those circumstances seems unjustified but Fico looks at aggregate open balance to loan in scoring.

Best guess is your aggregate balance to loan ratio went up (since  balance/loan was likely less on the older loan). I'd be curious to know what the balance/loan was on the two combined just prior to pay off vs the balance/loan on the remaining one post payoff.

[pipeguy]

My car loan 72 month Ally Bank, I paid off $14,485 on an original amount of $24100

DW's loan DCU was $16000 (bought the car 12.31.14), balance currently $12,100 - note this is a 60 month, 1.49% simple interest loan, I'm in no hurry to pay it off quickly.

[Anonymous]

You could always forego the new car. That's the easy way to avoid lending hassles.

[pipeguy]

---

@Anonymous wrote:

You could always forego the new car. That's the easy way to avoid lending hassles.

---

In my "business" I need a quality dark color 4 door sedan and no I don't drive for a living. My current car is a 2013 purchaed new, and at 34 months old it has 91.500 miles on the clock, yes it's time to get a new car. I'm already approved through DCU for a new car loan $30k for 65 months at 1.99%, it's not that I have any issues at all getting a car loan approved, I was just commenting on how payimg off my old note early ended up costing me FICO points (EQ and TU are still over 750, EX a bit lower at 737)

[Thomas_Thumb]

---

@pipeguy wrote:

My car loan 72 month Ally Bank, I paid off $14,485 on an original amount of $24100

DW's loan DCU was $16000 as (bought the car 12.31.14), balance currently $12,100 - note this is a 60 month, 1.49% simple interest loan, I'm in no hurry to pay it off quickly.

---

Thank's for the data.

Looks like your AG balance to loan was 66.3% before the payoff and has now gone up to 75.6% after the payoff. Could a score drop relate to crossing back above a 70% balance to loan threshold? Your data and CAPTOOL's support a possible 70% threshold.

[pipeguy]

---

@Thomas_Thumb wrote:

---

@pipeguy wrote:

My car loan 72 month Ally Bank, I paid off $14,485 on an original amount of $24100

DW's loan DCU was $16000 as (bought the car 12.31.14), balance currently $12,100 - note this is a 60 month, 1.49% simple interest loan, I'm in no hurry to pay it off quickly.

---

Thank's for the data.

Looks like your AG balance to loan was 66.3% before the payoff and has now gone up to 75.6% after the payoff. Could a score drop relate to crossing back above a 70% balance to loan threshold? Your data and CAPTOOL's support a possible 70% threshold.

---

You might be right as far as the "why" and frankly I don't worry at all about gaining or losing points based on something like a major purchase hitting a card just at the cut date - just put $800 worth of tires on a card and it posted the day the statement period ended, but a $0 balance card is going to report  a $800 balance this month ($10k CL on that card, no worries on utility on that card, still only 8%). 

I just found it interesting that paying off debt, yet keeping the "credit mix" of installment/revolving/mortgage still resulted in a score drop in every CRA. Funny thing is, my Equifax report dropped 11 points and then later today went +5 for no specfic reason.  The difference between 767 and 761 makes no difference in my obtaining credit products and I'm already preapproved on a new car loan, but I can see why some people that obsess over scores can get frustrated. 

[jamie123]

There has been some speculation on this board that you get a few more points for having a second open installment loan on your reports. It has not been verfified but I seem to see a pattern where 1 open installment loan is worth about 20-30 points and the 2nd open installment loan is worth around 10 points.

Having those extra 20 to 40 points can make a big difference in a lot of people's loan interest rates and can save them hundreds of dollars on auto loans and thousands of dollars on mortgages. You can move up maybe 1 to 2 tiers in interest rate reductions with those points.

[SouthJamaica]

---

@Thomas_Thumb wrote:

---

@pipeguy wrote:

My car loan 72 month Ally Bank, I paid off $14,485 on an original amount of $24100

DW's loan DCU was $16000 as (bought the car 12.31.14), balance currently $12,100 - note this is a 60 month, 1.49% simple interest loan, I'm in no hurry to pay it off quickly.

---

Thank's for the data.

Looks like your AG balance to loan was 66.3% before the payoff and has now gone up to 75.6% after the payoff. Could a score drop relate to crossing back above a 70% balance to loan threshold? Your data and CAPTOOL's support a possible 70% threshold.

---

Yes but isn't there really a much simpler explanation?

It just seems to me that paying off a loan always results in a point drop. In my case, with my little reindeer loan, I lost 25 and 29 points by going from a $78 balance to a zero balance, despite the fact that my instalment loan aggregate utilization went from 15% to 0%.

I don't know why Fair Isaac hasn't figured out that paying off a loan is a good thing.

[Thomas_Thumb]

---

@SouthJamaica wrote:

Yes but isn't there really a much simpler explanation?

It just seems to me that paying off a loan always results in a point drop. In my case, with my little reindeer loan, I lost 25 and 29 points by going from a $78 balance to a zero balance, despite the fact that my instalment loan aggregate utilization went from 15% to 0%.

I don't know why Fair Isaac hasn't figured out that paying off a loan is a good thing.

---

---

 Yes, that would be a simpler explanation. However, closing out a loan does not always result in a score drop particularly when you had 3 open loans (1 mortgage and 2 auto loans). In this case there are still 2 open loans on file so the metric balance to loan ratio is still counted in scoring. If you have no open loans, any potential points associated with that metric no longer apply.

As mentioned in other threads, other posters have reported Fico 8 scores of 850 with no open loans - so the "benefit" of an open loan in scoring can be offset with higher scores in other areas.