Less of a drop that I thought * knock on wood

[jeffm4688]

I bought a car last June for $26K and worked hard to pay it down as every time I would I'd get a score increase. At the end of the day I ended up gaining almost 30 points paying it down below ~65%.

I hated that damn thing and after only putting 3500 miles on it i traded it in for an audi on 12/29 which I opened a $39K loan for.

Today my old loan shows paid off & my new loan is reporting $39K balance of $39k total and I got the dreaded score drop. I was fully expecting to see a 30 point drop but I lost about 10 points!

(went from 689 to 678) on EX and about the same everywhere else. I now wonder if I can swing the 700 club by paying this one down quicker (already paid down to 35K but hasn't reported yet).

[BallBounces]

I think these installment loans have less of an impact for thick files than conventional wisdom may assign. I am curious, do you have any OTHER open installment loans?

[jeffm4688]

I have 3 student loans which are like so :

1501 / 2000

1149 / 1378

2884 / 3500

all above 80% of their original value but are a few of the oldest accounts on my report as their from 2009. As you can see from an aggregate perspective the auto loan trumps these by a longshot.

[Thomas_Thumb]

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@jeffm4688 wrote:

I bought a car last June for $26K and worked hard to pay it down as every time I would I'd get a score increase. At the end of the day I ended up gaining almost 30 points paying it down below ~65%.

I hated that damn thing and after only putting 3500 miles on it i traded it in for an audi on 12/29 which I opened a $39K loan for.

Today my old loan shows paid off & my new loan is reporting $39K balance of $39k total and I got the dreaded score drop. I was fully expecting to see a 30 point drop but I lost about 10 points!

(went from 689 to 678) on EX and about the same everywhere else. I now wonder if I can swing the 700 club by paying this one down quicker (already paid down to 35K but hasn't reported yet).

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Thanks for the info.

Do you recall if there were any specific % balance thresholds where you picked up points? It may be hard to pinpoint because the loan aging might give you some points regardless of pay down.

I suspect the impact of the 2nd loan may be softened by having a closed one on file but, that's a guess. Also, hard inquiries associated with new credit are grouped in bins. The inquiry from the 1st loan may have pushed your profile into a different inquiry bin but, perhaps the inquiry from the 2nd loan kept you in the same bin - or maybe they only did a SP if your loan was through the same lender.

Paying the loan down will allow you to pick up points when you drop below certain balance to loan thresholds. I think there may be thresholds at  90% and 70%. Others think there is one at 80%. There is also one, possibly two, thresholds for aggregate balance to loan ratios on the low end (speculation is 30% and/or 10%).  

You may gain points when your closed loan/associated HP ages past 12 months. If you pay down new loan to 60% a score of 700 in July certainly seems possible.

Let us know if the pay down to 35k (89%) helped your score.

[BallBounces]

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@jeffm4688 wrote:

I have 3 student loans which are like so :

1501 / 2000

1149 / 1378

2884 / 3500

all above 80% of their original value but are a few of the oldest accounts on my report as their from 2009. As you can see from an aggregate perspective the auto loan trumps these by a longshot.

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But, the fact that you have them matters.  If your car loan had been your only installment, the short term effect may well have been larger.