While the effects of opening, paying down, and paying off one's only open installment loan on FICO 8 have been much discussed topics among us, the effects of these events on the other FICO scoring models are rarely observed since we have little access to the mortgage and other scores.
Last month I paid off my only open installment loan.
As anticipated it was murder on my FICO 8 scores.
I have tried to measure the short term effect of the payoff across the spectrum of FICO scoring models, including the mortgage scores (EQ FICO 5, TU FICO 4, and EX FICO 2). Unfortunately I could not get a crystal clear reading, due to net positive changes in revolving utilization occurring during the same period, but will do the best I can.
I pulled a 3B report on July 3rd, before the payoff had reported, and another on July 6th, after it had reported on EX and EQ.
The changes in my raw scores on EX and EQ are as follows, but unfortunately they are muffled by the changes in credit card utilization:
| FICO score model | EQ | TU | EX |
| FICO 9 | -21 | +12 | |
| FICO 8 | -32 | -25 | |
| EQ FICO 5, TU FICO 4, EX FICO 2 | +-0 | +-0 | |
| FICO 3 | -6 | ||
| Auto 9 | -22 | -13 | |
| Auto 8 | -57 | -39 | |
| EQ Auto 5, TU Auto 4, EX Auto 2 | +-0 | -17 | |
| Bankcard 9 | -21 | -12 | |
| Bankcard 8 | -31 | -35 | |
| EQ Bankcard 5, TU Bankcard 4, EX Bankcard 2 | +13 | -6 |
Revolving utilization changes occurred during that same 3-day period which probably affected the scores are:
-59% revolver paid down to zero in EQ and EX
-overall revolving utilization dropped from 8.9% to 7% in EQ and from 8.3% to 6.4% in EX
-8/29 accounts with balances went up to 9/29 in EQ
Since I am familiar with FICO 8's reaction to revolving utilization changes in my profile I can estimate that in FICO 8 the above utilization changes had a net effect of 7-10 points upward, so that the net downward effect on FICO 8 from the loan payoff was probably 39-42 points in EQ and 32-35 points in EX.
I honestly cannot make an estimate with regard to the other scoring models, since I have so little experience with their day to day reactions to things.
I'd be interested in seeing comparison data from your opening if you have it easily available, suspect it should be about the same as it was for me. Yeah balances make it hard to control unless you're starting and ending in AZEO or whatever.
FICO 04 didn't seem to have any impact to whatever I did with my loans, nor did it have a reason code either for it that I ever saw at least.
FICO 9 I assume is similar to FICO 8, since it has the same reason code:
- The remaining balance on your mortgage or non-mortgage installment loans is too high.
@Revelate wrote:I'd be interested in seeing comparison data from your opening if you have it easily available, suspect it should be about the same as it was for me. Yeah balances make it hard to control unless you're starting and ending in AZEO or whatever.
FICO 04 didn't seem to have any impact to whatever I did with my loans, nor did it have a reason code either for it that I ever saw at least.
FICO 9 I assume is similar to FICO 8, since it has the same reason code:
- The remaining balance on your mortgage or non-mortgage installment loans is too high.
What struck me is that the scores that reacted strongly were all "8's".... Classic 8, Auto 8, and Bankcard 8.
Not sure what you mean by "comparison data from your opening".
Basically when I paid down my loans, and then opened up a mortgage, my score movement was basically identical both upward and then downward.
That's what I meant for comparison 
.
@Revelate wrote:Basically when I paid down my loans, and then opened up a mortgage, my score movement was basically identical both upward and then downward.
That's what I meant for comparison
I'm sure that the downward movement in FICO 8 was comparable to the upward movement when I first got to play in the reindeer games
What I'm debating now is whether to (a) try to replace my lost installment loan with an SSL, or (b) try aging my profile instead, which would mean foregoing the new account.
An important lesson I've learned from this is that the whole 'credit mix' strategy of adding an otherwise pointless installment loan has no bearing at all on the mortgage scores.
I wonder why the mortgage scores do not react like so many of the others.
We should keep this in mind when we get a post asking "I'm planning to apply for a mortgage in a year, what can I do to improve my scores?"
In the aftermath of this FICO 8 debacle, all of the negative reason codes for my mortgage scores relate to my revolving accounts:
You opened a new credit account relatively recently.
You have a short credit history.
You have too many credit cards and/or open-ended accounts carrying balances.
You've recently been looking for credit.
You have not established a long revolving and/or open-ended account credit history.
You've made heavy use of your available revolving credit.
You have too many credit accounts with balances.
There is no complaint about the lack of "recent activity from a non-mortgage installment loan" as there is in FICO 8 and FICO 9.
Update 7/8/18. The TU mortgage score reacted differently. It did subtract 8 points, and it did provide the negative reason code that goes with the absence of an open installment loan:
1. You opened a new credit account relatively recently.
- 2. You have not established a long revolving and/or open-ended account credit history.
- 3. You have a short credit history.
- 4. You have no recent activity from a non-mortgage installment loan.
The loan payoff has now reported on TU. So here's the completed 3-bureau spreadsheet. The TU readings are more accurate, in terms of measuring the effect of the loan payoff, because they are not muffled by the positive revolving utilization changes which softened the blow a little in EX and EQ.
| FICO score model | EQ | TU | EX | |
| FICO 9 | -21 | -28 | +12 | |
| FICO 8 | -32 | -34 | -25 | |
| EQ FICO 5, TU FICO 4, EX FICO 2 | +-0 | -8 | +-0 | |
| FICO 3 | -6 | |||
| Auto 9 | -22 | -28 | -13 | |
| Auto 8 | -57 | -62 | -39 | |
| EQ Auto 5, TU Auto 4, EX Auto 2 | +-0 | -35 | -17 | |
| Bankcard 9 | -21 | -27 | -12 | |
| Bankcard 8 | -31 | -42 | -35 | |
| EQ Bankcard 5, TU Bankcard 4, EX Bankcard 2 | +13 | -7 | -6 | |
The mortgage score readings are consistent with my prior limited experience with the effect or noneffect of changes in overall installment utilization percentage. TU reacts a little, but much less severely than FICO 8 and 9, while EX and EQ just shrug it off.
Further evidence that the TU mortgage score does factor it in, while the other two do not, is that the negative reason code "You have no recent activity from a non-mortgage installment loan" appears in TU but not in EQ or EX.
So now, the personal question for me, is what next?
1. The FICO credit mix gods have roundly punished me for having no open installment loan.
2. The FICO account-aging gods continue to punish me, as they have regularly since I began visiting this forum, for the 'newness' of, and recent activity in, my portfolio.
Do I sit tight now, make no new applications, season my profile, and appease the account-aging gods?
Or do I inflame the account-aging gods by opening another "new account" to appease the credit mix gods?
If you don't have anything important (read as mortgage or auto loan) coming up in the next however long you care about, go sort it with a SSL imo.
FICO 04 doesn't care about installment utilization/ratios but EX FICO 2 has moved for me every time I made a material change in my installment loans.
FICO 04 was a pretty significant departure from the earlier models, and FICO does take their datasets and play to see what is a predictor of default and what is not... presumably the data they had after the dotcom bubble and collapse suggested that installment utilization wasn't really a factor and so they discounted it. Oddly enough it does appear to be in the FICO 04 industry options of some sort.
FICO changed it again in FICO 8, every model is a different target unfortunately but in general optimizing for one optimizes for all.