Paid Off Mortgage=Score Drop

cem13 · ‎05-19-2023

I posted previously about my near-retirement journey and how paying down debt affects my score. Previsously I reported a negative CLI from Apple with a FICO 09 Perfect Score of 850.

Well today I received a TU notification that I dropped 5 points for paying off mortgage. EX and EQ reported without a score change.

I have 1 CC reporting, 3 Student Loans (waiting on USSC for their decision), 1 car payment and 1 personal loan.

Total UTIL is under 1%. Both consumer loans are under 50%, student loan is about 90% paid.

FICO 08 scores are: TU=828, EX=821 and EQ=842

It really bothers me to lose points. I just cannot help it. So I think I will have to self medicate with my friend Jack Daniels tonight and see if he has any answers. He has never, I mean never ever, gave me any good advice. Maybe tonight is my lucky night.

FICO 08 JUL23: TU 850; EQ 846; EX 843. Clean since BK7 D/C 6/2011.

FireMedic1 · ‎05-19-2023

It all stems from the util % of the total loans that are still open might have went up a few points. Once they're paid down some more the 5 pts will come back and then some.

cem13 · ‎05-19-2023

I am not really interested in my FICO score anymore. I do not plan on applying for any loans in the next 5 years or so. Maybe when I retire, I will need to get that High Country Sierra. No respectable retiree would ever be seen driving anything less. I have appearances to maintain, especially for the ladies at the BINGO parlor.

FICO 08 JUL23: TU 850; EQ 846; EX 843. Clean since BK7 D/C 6/2011.

Kforce · ‎05-19-2023

@FireMedic1 wrote:
It all stems from the util % of the total loans that are still open might have went up a few points. Once they're paid down some more the 5 pts will come back and then some.

^^^ This

The real loss will be when you pay off the car, personal and student loans.

FireMedic1 · ‎05-19-2023

Ok then. Enjoy your retirement! And the hotties at BINGO!

Thomas_Thumb · ‎05-20-2023

@cem13 wrote:
I posted previously about my near-retirement journey and how paying down debt affects my score. Previsously I reported a negative CLI from Apple with a FICO 09 Perfect Score of 850.

Well today I received a TU notification that I dropped 5 points for paying off mortgage. EX and EQ reported without a score change.

I have 1 CC reporting, 3 Student Loans (waiting on USSC for their decision), 1 car payment and 1 personal loan.
Total UTIL is under 1%. Both consumer loans are under 50%, student loan is about 90% paid.
FICO 08 scores are: TU=828, EX=821 and EQ=842

It really bothers me to lose points. I just cannot help it.

FICO looks at a few different metrics associated with installment loans for scoring:

1. Aggregate balance to loan ratio of open loans. Paying off a mortgage typically results in an increase B/L ratio. This can cause a score drop.

2. Age of open loans - both average age and oldest open loan. Often a mortgage is the oldest loan so paying it off hurts this metric as well and could cause a score drop.

3. Age of oldest loan on file and average age of all loans. Payoff and closure has no impact on this metric.

4. Credit mix. Having an installment account on file in addition to open revolving accounts increases credit mix. Loans count the same toward mix whether open or closed

5. Presence of installment loan activity. If a profile has only one active open loan and it is paid off, there is no longer any active loan activity. This often causes a score drop. Note: open loans in deferment may not be considered active.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950

SouthJamaica · ‎05-21-2023

@cem13 wrote:
I posted previously about my near-retirement journey and how paying down debt affects my score. Previsously I reported a negative CLI from Apple with a FICO 09 Perfect Score of 850.

Well today I received a TU notification that I dropped 5 points for paying off mortgage. EX and EQ reported without a score change.

I have 1 CC reporting, 3 Student Loans (waiting on USSC for their decision), 1 car payment and 1 personal loan.
Total UTIL is under 1%. Both consumer loans are under 50%, student loan is about 90% paid.
FICO 08 scores are: TU=828, EX=821 and EQ=842

It really bothers me to lose points. I just cannot help it. So I think I will have to self medicate with my friend Jack Daniels tonight and see if he has any answers. He has never, I mean never ever, gave me any good advice. Maybe tonight is my lucky night.

I'm skeptical that paying off the mortgage is the cause of the point loss.