FICO drop or will it be a wash?

[CAS2019]

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@DollyLama wrote:

Can you post this in the mortgage loan section, only the part about closing 2 weeks, need payoff car loan, and will be paid at closing. 

There are mortgage lenders there that would be able to direct you more. I am not, but wondering if you should get the payoff amount and send it on in with escrow now to cover the amount. You definitely do not need to be rolling the car payoff into the mortgage loan over many years with interest and higher monthly payments. They may just have you write a check payable to auto lender for the payoff in hand seperately. 

Just note that not until the mortgage is fully funded, if you are anticipating buying appliances or such to not sign on dotted line, get keys and go to the store, they can still check your files, which will mess up your loan. 

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Oh, to clarify, the loan payoff won’t be rolled into the mortgage.  I have to give them a check in addition to the closing costs.  

How  do I move this to the mortgage forum?  TBH, when I first started this thread, I wasn’t certain which one I should post it in.  I need to start listening to my intuition!

[CAS2019]

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@HeavenOhio wrote:

@CAS2019, I think you're going to be fine. This setup would seem to eliminate the possibllity of causing a scoring surprise before closing.

Apart from the mortgage, make sure that you track the loan payoff diligently. We've seen cases where people buy a new car and the dealer is supposed to pay off the old loan. Then they don't, and the customer gets hit with a 30-day late. Be prepared to make another monthly payment on the loan if necessary. If the car loan ends up being overpaid, your money will be refunded.

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Oh, VERY good point!  I will, especially since the car loan is with a small credit union (I’ve had a couple of issues with them once the car loan went through).

Thanks!

[Thomas_Thumb]

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@CAS2019 wrote:

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!

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Your score may drop 5 to 10 points depending on the current balance to loan ratio on your Auto. When your mortgage reports your B/L ratio will be 100%. If your Auto loan has a B/L less than 70% you may be realizing a few points the reduction inB/L. If so, those will disappear when the loan is paid off and the mortgage reports.

[CAS2019]

Thanks, Thomas.  Unfortunately, I have only made five payments on the car loan (it was opened in August), so I should expect then, a 5 to 10 drop in my score?  I don’t know why I’m so worried over the drop, as I’m not planning on applying for any more cc’s until my oldest cc ages at least one year anyway.