That isnt too bad. Do you have any other loans at all? Congrats on dumping a monthly payment and ownership.
@rmduhon wrote:No other loans, but not going to get one just for scoring purposes for the foreseeable future.
@FireMedic1 wrote:That isnt too bad. Do you have any other loans at all? Congrats on dumping a monthly payment and ownership.
When I paid off my car loan (April, 2021) I took a 30-point hit to all three. That was because of:
1. My Credit Profile (there are 12 - eight on the 'good side' and four on the 'bad side')
2. It was my only open installment loan (the ex-wife and I had just two months prior resolved the home mortgage 'situation')
So, point here is that the 'number' will likely be different for everyone. And the 'hit' will be different for everyone - because of said 'credit profile'!
It does not seem to make sense to us humans that paying off a debt - such as a mortgage or auto - would be "a negative thing" but in the FICO Algorithms it does indeed make sense. To combat this (not having an open installment loan) I opened an SSL Account with NFCU and paid it down recently to below 8.9% and those 30 points - across the board - are back!
This situation (closing an open installment loan) is a great learning experience for everyone who has not expereinced it and/or not read about it (in this forum - or elsewhere). I knew that it was coming - but (if I am being honest) did not expect a 30-point drop!
Remenber the phrase "Finances over FICO"! Congrats on not having that monthly payment. What - if I might ask - are you doing to do with the money that was formerly budgeted for "Car Payment"?
Starting Score: Exp 627
@rmduhon wrote:I paid off my truck last month and have been waiting for it to hit my reports so I could see how bad of a hit we'd take. 17 and 18 points on our Experian Fico 8 (only free one we have access to). Could have been worse but was hoping for less. Will be getting another vehicle in a year or 2 and we'll get the points back
Was that your only open loan? If not, might get the points back sooner if you can pay your other loan(s) down to 10%.
BTW if it was your only loan, you won't actually get the points back when you open the loan.You only get them back after you pay the new loan down to less than 10% of the original loan amount.
@SouthJamaica wrote:
@rmduhon wrote:I paid off my truck last month and have been waiting for it to hit my reports so I could see how bad of a hit we'd take. 17 and 18 points on our Experian Fico 8 (only free one we have access to). Could have been worse but was hoping for less. Will be getting another vehicle in a year or 2 and we'll get the points back
Was that your only open loan? If not, might get the points back sooner if you can pay your other loan(s) down to 10%.
BTW if it was your only loan, you won't actually get the points back when you open the loan.You only get them back after you pay the new loan down to less than 10% of the original loan amount.
Very correct! My DW had 830's on her FICO 8's with an auto loan (the only loan) that was paid down to .01% for many months (held onto that only loan for as long as possible!). When the loan finally hit the CRA's as paid off, she had 30+ point drops across all 3.
About 4 months later, she took a few HP's and gets another auto loan. Of course, those new HP's drop her score down about 3 points. Then the new auto loan hit the CRA's a couple of months later, and she dropped about 10-15 points at 95% still owed on the loan. It will take a while to get back those 40-50 lost points, probably not until hitting that ~10% threshold.
@Duke_Nukem wrote:
@SouthJamaica wrote:
@rmduhon wrote:I paid off my truck last month and have been waiting for it to hit my reports so I could see how bad of a hit we'd take. 17 and 18 points on our Experian Fico 8 (only free one we have access to). Could have been worse but was hoping for less. Will be getting another vehicle in a year or 2 and we'll get the points back
Was that your only open loan? If not, might get the points back sooner if you can pay your other loan(s) down to 10%.
BTW if it was your only loan, you won't actually get the points back when you open the loan.You only get them back after you pay the new loan down to less than 10% of the original loan amount.
Very correct! My DW had 830's on her FICO 8's with an auto loan (the only loan) that was paid down to .01% for many months (held onto that only loan for as long as possible!). When the loan finally hit the CRA's as paid off, she had 30+ point drops across all 3.
About 4 months later, she took a few HP's and gets another auto loan. Of course, those new HP's drop her score down about 3 points. Then the new auto loan hit the CRA's a couple of months later, and she dropped about 10-15 points at 95% still owed on the loan. It will take a while to get back those 40-50 lost points, probably not until hitting that ~10% threshold.
Exactly.