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Mortgage payout

New Member

Mortgage payout

I have a question about the effect of paying off the mortgage on the credit score. About a month ago I sold my house and the remaining mortgae (about 50K) was paid off and the mortgage loan closed as the result of the sale.

This info was finally reflected in my credit reports about a week ago.

As a result of closing the mortgage loan, my TransUnion credit score went up by about 4 points, but my Experian Credit score went down by 26 points (!). Why is that??  

19 REPLIES
Super Contributor

Re: Mortgage payout


@glacier3 wrote:

I have a question about the effect of paying off the mortgage on the credit score. About a month ago I sold my house and the remaining mortgae (about 50K) was paid off and the mortgage loan closed as the result of the sale.

This info was finally reflected in my credit reports about a week ago.

As a result of closing the mortgage loan, my TransUnion credit score went up by about 4 points, but my Experian Credit score went down by 26 points (!). Why is that??  


Can you be more precise as to which scoring models you're referring to. Which TU score. Which EX score.

 

Also whether you have other open installment loans, and if so the original loan amount and the current reported balance.

 

 

 

 


FICO8 EQ 760 TU 795 EX 764 Total revolving limits 661200 (551200 reporting)
Message 2 of 20
New Member

Re: Mortgage payout

Here is what I can see about the scoring models. I am signed up for credit monitoring separately with Experian and with TransUnion. Each time I login there, they display my credit score.  On the Experian website it says "Fico Score 8" next to that score. It went down from 849 before the house sale to 826 now (so it was 23 points down, not 26, sorry about that). On the Transunion page it says "Based on VantageScore 3.0". The score there was 828 before the house sale and is 832 now. 

 

No, I don't have any other installment loans, that was the only one. I do have several credit cards, with the oldest one being about 26 years old. The mortgage loan was refinanced at some point (I think in 2012), to bring down the interest rate. I don't remember the precise amount of the loan at that time, I think it was something in the 90K range.   

Message 3 of 20
Super Contributor

Re: Mortgage payout


@glacier3 wrote:

Here is what I can see about the scoring models. I am signed up for credit monitoring separately with Experian and with TransUnion. Each time I login there, they display my credit score.  On the Experian website it says "Fico Score 8" next to that score. It went down from 849 before the house sale to 826 now (so it was 23 points down, not 26, sorry about that). On the Transunion page it says "Based on VantageScore 3.0". The score there was 828 before the house sale and is 832 now. 

 

No, I don't have any other installment loans, that was the only one. I do have several credit cards, with the oldest one being about 26 years old. The mortgage loan was refinanced at some point (I think in 2012), to bring down the interest rate. I don't remember the precise amount of the loan at that time, I think it was something in the 90K range.   


1. OK so disregard the TU score, it is a Vantage 3.0 score which is not a FICO score and is meaningless for our purposes.

 

2. On installment loans I was asking only about open loans. So the answer to that is no, the mortgage you just paid off was your only open installment loan, and now you have none.  The FICO 8 scoring models penalize people for having no open installment loans.  So the drop in your EX FICO 8 is totally predictable. You have probably experienced a similar drop in TU FICO 8 and EQ FICO 8, you just don't know it yet since you don't have access to those scores.

 

3. The FICO 8 scores are not mortgage scores. Fortunately, the FICO mortgage scores either won't react to the payoff of the mortgage, or will react only slightly. On the Experian site you can check your FICO 2 score, under "FICO Scores > Mortgage Lending", to see what effect, if any, the mortgage payoff had on that. I'm guessing little or none, but I would be interested in your reporting back on that.

 

In view of your excellent scores, this has no real life impact on you at all.

 

BTW if you're wondering why some scoring models would penalize someone for being debt free.....  you're not alone.


FICO8 EQ 760 TU 795 EX 764 Total revolving limits 661200 (551200 reporting)
Message 4 of 20
New Member

Re: Mortgage payout

I see, very interesting, thanks!

Message 5 of 20
New Member

Re: Mortgage payout

I found the Fico 2 score at the Experian website. It now says 815. I don't know what it was before the mortgage payoff....

Message 6 of 20
Super Contributor

Re: Mortgage payout


@glacier3 wrote:

I see, very interesting, thanks!


It would be interesting to see if the mortgage payoff had any effect on your EX FICO 2 score, the mortgage score. Can you please check that out and let us know? It's under "FICO Scores > Mortgage Lending". Compare today's score with the score from the score that was in effect the day before the payoff reported.


FICO8 EQ 760 TU 795 EX 764 Total revolving limits 661200 (551200 reporting)
Message 7 of 20
Super Contributor

Re: Mortgage payout


@glacier3 wrote:

I found the Fico 2 score at the Experian website. It now says 815. I don't know what it was before the mortgage payoff....


You can find out easily.

 

1. Go to "Credit Reports".

2. In the upper left hand corner there's a drop down menu under "Archived Reports".

3. Go to the date of the last report before the payoff reported.

4. Then check credit scores again.

 


FICO8 EQ 760 TU 795 EX 764 Total revolving limits 661200 (551200 reporting)
Message 8 of 20
New Member

Re: Mortgage payout

Ok, found it. Before the mortgage payout the Fico Score 2 for mortgage was 817.

Message 9 of 20
Super Contributor

Re: Mortgage payout


@glacier3 wrote:

Ok, found it. Before the mortgage payout the Fico Score 2 for mortgage was 817.


Awesome. This is valuable information you just provided.

 

You paid off your only open installment loan.

EX FICO 8 dropped 23 points.

EX FICO 2 dropped only 2 points.

 

Great data point. Thank you.

 

 

 


FICO8 EQ 760 TU 795 EX 764 Total revolving limits 661200 (551200 reporting)
Message 10 of 20