Hi! I hope this is the correct forum topic, if not, I apologize. I am in the middle of escrow, and everything has been going extremely well. However, this afternoon I received a call
from the lender and they are requiring that a car loan be paid off. I don’t have any issues with this, but it’s only five mos. old (car loan). I have a very short/thin credit file as I started in April of this year. The (car) loan will be paid at closing. My question is, will my FICO score take a big hit with the loan being paid off or will it be a wash since the mortgage will be added?
my information is as follows:
FICO 8 scores: EX 703; EQ 730; TU 708
Car loan: $5192 as of today, opened 8/1/2018
Cap1 Secured CC $0./$500. Opened 4/1/2018
Sync TJMaxx CC $0/$500. Opened 10/1/2018
Chase Amazon Prime Sig VISA $0/$5400. Opened 10/1/2018
Chase Freedom $270/$5400. Opened 10/1/18
I always PIF, and my utilization tends to be anywhere between 3% to 6%.
- Sincere thanks!
Starting Score: 784
@Anonymous wrote:
With a mortgage replacing the auto you will be fine. Might take a hit temporarily if there is a gap between one leaving and the other being reported.
Thank you so much, Brandon
@HeavenOhio wrote:@CAS2019, don't do anything until you get more opinions. Other than bringing down credit card balances (yours are great), changing things up in the middle of the mortgage process is risky.
We don't know the original loan amount, so we don't know how FICO 8 will react. The probable direction for it to head is down, though. Mortgage scores are much less likely to change negatively, but one of them may.
I'm assuming this is a DTI thing. I'd feel safer reducing the loan balance to under 8.9% of the original loan amount rather than closing it entirely.
Thank you Heaven! It is a DTI thing and I did ask re paying down the loan, but the lender wants it paid in full. I figured since it was a relatively small auto loan, they would be amenable to this—but no go. So, I am stuck paying it off at closing (we are two weeks away). My feeling was I would take a big hit because my credit file is so limited. Like many on this forum, I am obsessed with my scores, and although intellectually I understand FICO scores aren’t static and can change from day to day, it aggravates me to no end when one or all dips just a couple of points—I can only imagine if it dips a lot!
i completely forgot, the mortgage loan is $193,000–which is a relatively small mortgage in SoCal. I am on a fixed income ($50,000) which is probably a main component in all of this.
i guess the silver lining would be one less monthly payment (by paying off the car loan).
I gain so much knowledge from this forum, and I truly feel I don’t know what I would do without it. Again a big THANK YOU for everyone’s expertise!
I wish everyone and your’s, a very safe and joyous holiday week!
@DollyLama wrote:I'm with Heaven's reply on this topic. I do understand the DTI. Evidently it is now contingent upon the payoff. What is your middle mortgage score? They are not using FICO 8s. Just wondering if you were on the cusp of qualifying and how detrimental the absence of the loan will affect once you are rapid rescored prior to closing.
Do you know if you are just to provide proof from lender that account is paid off? Or ask the UW if doing a rapid rescore and your middle mortgage should drop, how this will affect your eligibilty of obtaining the mortgage.
My FICO middle score (for mortgage) was 701, MyFICO showed 703, so, it was only a couple of points off.
The check at closing, will include the payoff. It’s to assure the lender the loan has been paid. It was explained to me, sometimes it takes the holder of the (in this case, car) loan some time to get the necessary documents to them, hence paying at closing will eliminate the uncertainty. I’m not clear, however, if the escrow company pays it off or the lender. I’m assuming it would be the escrow company, though? I’m a first time home buyer, so all of this is quite educational.
Also, the final credit score pull will be a soft pull, and not hard (I asked), 