Installment Loan Payoff

[CreditBob]

Here is my question for when I payoff my personal loan. Will the score drop or stay the same for the next few months? In other words will  a recent closed account within a few months or even a year of doing so keep the same score or will it drop the points compared to having a five percent low utilization. If there is any member who tracked the score right before payoff and what the result was immediately or within a few months after payoff.

[SouthJamaica]

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@CreditBob wrote:

Here is my question for when I payoff my personal loan. Will the score drop or stay the same for the next few months? In other words will  a recent closed account within a few months or even a year of doing so keep the same score or will it drop the points compared to having a five percent low utilization. If there is any member who tracked the score right before payoff and what the result was immediately or within a few months after payoff.

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If it's your only open installment loan, and you presently are at 5% of the original loan amount, yes paying it down to zero will ding some of your scores -- the FICO 8 scores. Your mortgage scores will not be affected much, if at all. As to the number of points, that is very profile-specific, but in my case it cost me around 25 points as I recall.

[Anonymous]

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@CreditBob wrote:

Here is my question for when I payoff my personal loan. Will the score drop or stay the same for the next few months? In other words will  a recent closed account within a few months or even a year of doing so keep the same score or will it drop the points compared to having a five percent low utilization. If there is any member who tracked the score right before payoff and what the result was immediately or within a few months after payoff.

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It all depends on when it reports as closed.  Once it reports as closed, your FICO score will reflect that new CR information.  It's a moment in time change; it will happen all at once.  Your score(s) will stay the same until the loan reports closed, then they'll change.  It will be a black and white change with no gray areas in between.