So I've been repairing my credit and doing a good job (many thanks to members of this forum for their help, even if they didn't know it). Last late payment well over a year ago. Paying down revolving debt nicely and score on all three bureaus up nearly 100 points in the past 20 months or so...Until today.
In August, I got a 72-month auto loan from Space Coast CU because my previous car was totalled by a hit-and-run driver, ending/closing my loan with Capital One (which was itself in current status and had about 9 months left) as paid in full thanks to my insurer. Got a decent interest rate with SCCU, and thanks to the payoff from my insurer, I had a good down payment. I expected my scores to go UP...Instead, my Equifax and Experian scores DROPPED 21 and 27 points, respectively.
Nothing else has changed except for the new loan (and of course the fact that I was shopping for a car loan). No new deliquencies and actually almost paid off on two collections.
Can anyone take a stab at why my scores tanked?
Starting Score: 573
Did paying down the collections make them recently update when they weren't updating in the past?
You lowered the age of accounts with the new loan, you have a high balance loan now 100% whereas the balance of the old loan was lower < 10% ? as a percentage.
Perhaps others could chime in with some ideas.
@GatoradeZeroGuy wrote:Did paying down the collections make them recently update when they weren't updating in the past?
You lowered the age of accounts with the new loan, you have a high balance loan now 100% whereas the balance of the old loan was lower < 10% ? as a percentage.
Perhaps others could chime in with some ideas.
^Both of these would be my questions, too. And the mostly likely culprits.
Last HP 11-01-2022
Theres no util %'s with CA's. Being settled/paid does update it and it looks new even though they're done. If no other loans are reporting for that short time between the 2 loans. Thats a hit with no open loans. The new loan will affect all the age metrics. Looks about right. Congrats on the new car.
I assume there was an inquiry - first reduction. Next, is it possible that the reduction you specified represents the moment between the car loans? If so, then reduction for loss of mix type of loans. If new loan is reporting, then reduction for new account. And reduction for average age of accounts. If nothing else changes, then I predict your score will increase in three or four months when the effects of the HP and new account reductions lessen.
13Oct22 Exp F8: 812
@amfetamyne wrote:So I've been repairing my credit and doing a good job (many thanks to members of this forum for their help, even if they didn't know it). Last late payment well over a year ago. Paying down revolving debt nicely and score on all three bureaus up nearly 100 points in the past 20 months or so...Until today.
In August, I got a 72-month auto loan from Space Coast CU because my previous car was totalled by a hit-and-run driver, ending/closing my loan with Capital One (which was itself in current status and had about 9 months left) as paid in full thanks to my insurer. Got a decent interest rate with SCCU, and thanks to the payoff from my insurer, I had a good down payment. I expected my scores to go UP...Instead, my Equifax and Experian scores DROPPED 21 and 27 points, respectively.
Nothing else has changed except for the new loan (and of course the fact that I was shopping for a car loan). No new deliquencies and actually almost paid off on two collections.
Can anyone take a stab at why my scores tanked?
No stab needed; taking out a new loan lowers one's score.
1. Whenever you open a new credit account you should expect your scores to go down, not up. There was no reason in the world for that event to increase your FICO scores in any way.
2. The folks in this thread have made some spot-on guesses, but if you want a precise analysis you would need to give us more information -- the loan amount and the last balance on the old car loan, the new car loan, and any other open installment loans you might have.
3. The scores you're referring to are probably FICO 8's. The mortgage scores usually react less strongly to installment loan changes, so you can take comfort in that.
Your scores will eventually go back up - dont stress out over the loan dropping your score its only temporary
@disdreamin wrote:
@mfinsmi1 wrote:Your scores will eventually go back up - dont stress out over the loan dropping your score its only temporary
It's true that it is a temporary drop, but the rebound seems to be remarkably slow. I'm just over a year out from paying off installment loans and taking out a new one, and my FICO 8 is still down ~25 points from where I had been previously. Some of that is due to a HP for one new card and another new card reporting recently, but the majority of it is having lost the huge bounce for having an installment loan under 9%. Right now I'm working on getting the new installment loan under that threshold to see where that puts me, and what happens when I go back to no installment loan again - I'll have that data later this year.
I can tell you now if you have only one open loan, and it's over 10% of the loan amount, and you're going to get it down to 9%, you will see a BIG bounce in your FICO 8's and 9's, all other things being equal.