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Credit score dropped from auto loan.

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Anonymous
Not applicable

Credit score dropped from auto loan.

My transunion credit score was a 738 on credit karma and FICO. I recently refinanced my auto loan from chase to my bank police and fire credit union. I got an alert that there was a change to my credit report and it stated that there was a new account added which was chase and it stated “trade” and my score dropped 57 points? Is that possible that much of a score drop? And will I get my points back or no?
Message 1 of 6
5 REPLIES 5
CramEiko
Established Contributor

Re: Credit score dropped from auto loan.


@Anonymous wrote:
My transunion credit score was a 738 on credit karma and FICO. I recently refinanced my auto loan from chase to my bank police and fire credit union. I got an alert that there was a change to my credit report and it stated that there was a new account added which was chase and it stated “trade” and my score dropped 57 points? Is that possible that much of a score drop? And will I get my points back or no?

CK isn't much more than a tool. You will see people calling thier Fico numbers - FAKO numbers around here. CK can drive you crazy with all their mixed messages. How log ago did you get your refi on your car? If there was any change it may be because your AAoA changed and a HP pulled on your credit. It should go back up in time if there isn't any other changes.





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Message 2 of 6
Anonymous
Not applicable

Re: Credit score dropped from auto loan.

I agree with the other commenter that it would be helpful to know what tools you are using to obtain your scores and your reports.  There are many much tools out there: Credit Karma, Credit Check Total, myFICO Ultimate, free scores from credit cards, creditscore.com, etc.  You write:

 

"My transunion credit score was a 738 on credit karma and FICO."

 

You are using Karma for sure but you mention a FICO score as well, so it sounds like you are getting scores from some other source.  I am not sure I understand that sentence fully: do you mean that the Karma TU score (which is not a FICO) and your FICO TU score were both exactly 738?  That's possible but very rare.  They differ for most people by at least a few points, often as much as 100 points.

 

Tell us where you are getting your reports and scores from and we can help you better.

Message 3 of 6
Thomas_Thumb
Senior Contributor

Re: Credit score dropped from auto loan.


@Anonymous wrote:
My transunion credit score was a 738 on credit karma and FICO. I recently refinanced my auto loan from chase to my bank police and fire credit union. I got an alert that there was a change to my credit report and it stated that there was a new account added which was chase and it stated “trade” and my score dropped 57 points? Is that possible that much of a score drop? And will I get my points back or no?

A refi can result in a significant Fico score drop regardless of the reported CK VantageScore. Why?

1) There is the new account. If your AoYA was 12 months or greater, the drop in AoYA to 0 can dingscore 20 points.

2) There is the inquiry associated with the new account. This may drop score 5 points.

3) The refi itself will result in resetting B/L ratio to 100%. Not sure what your B/L was but, if the loan had been substantially paid down, the higher B/L can ding score - perhaps 20 points.

4) One, possibly two, of the CRAs looks at age of open installment loans as a scoring attribute. If your old loan has closed your open installment loan age has dropped.

 

Score drop associated with a refi should disappear over time - might take up to a year for an AoYA impact. Not sure on the B/L affect.

 

Then there is this from MyFico:

https://www.myfico.com/credit-education/faq/mortgage/impact-of-refinancing-on-credit-scores

How does refinancing affect my FICO score? What about if I modify the terms of my loan?

Refinancing and loan modifications can affect your FICO® score in a few areas. How much depends on whether it's reported to the credit bureaus as the same loan with changes or as an entirely new loan:

- If it's reported as the same loan with changes, three pieces of information associated with the loan modification may affect your score: the credit inquiry, changes to the loan balance, and changes to the terms of that loan. Overall, the impact of these changes on your FICO score should be minimal.

- If it's reported as a "new" loan, your score could still be affected by the inquiry, balance, and terms of the loan, - along with the additional impact of a new "open date." A new or recent open date typically indicates that it is a new credit obligation and, as a result, can impact the score more than if the terms of the existing loan are simply changed.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 4 of 6
Anonymous
Not applicable

Re: Credit score dropped from auto loan.

Good post from TT above on the many different factors that can go into a potential large score drop for the event mentioned.

Message 5 of 6
Anonymous
Not applicable

Re: Credit score dropped from auto loan.

Credit Karma uses the Vantage Model 3.0 scoring model. According to my local bank they do not even use their scoring model. CK is great for providing you valuble information such as a payment is late but it doesnt give you a clear indication on what that FICO score is. Many credit card companies provide a true FICO 8 Credit score, and so does My Fico. Refinancing you're car is saving you money, and closing the loan at hand. It may take some time to truly show the impacts of a refinance.

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