@LXRM36 wrote:So I'm working on bringing down debt piled up during the pandemic. I was able to pay off a loan last month I took out to start my business. Happened to make my final truck payment the same month. Results? -9, -6, and -5.
Simulator had a +5 to +15 boost for paying these loans off... be careful not to set your expectations off the simulator! Credit mix is not affected by this, and I have plenty of other debts still left to pay off. But overall debt is decreasing every month. I'm puzzled!
Sorry... had to vent.
1 There is a penalty for all zero revolving balances.
2 There is a penalty for no open loans.
3 There is a penalty for having 10% or higher aggregate installment utilization percentage. This percentage can be increased when a nearly paid down loan is paid down to zero.
You haven't given us enough information to determine which of the above might have been at play.
Meanwhile congratulations on paying stuff down.
And btw don't pay attention to simulators, they are a joke.
@Anonymous wrote:I paid off about 23k in credit card debt two weeks ago. Prior scores were between 650 & 690. Scores shot up to 740 - 760. EQ Score dropped 53pts this morning because the last two cards finally reported as paid off. Waiting for the other scores to follow.
Welcome to the forums.
From where are you getting your EQ score? 53 points is far too great of a loss for simply paying off balances.
FICO does not take into account DTI -- at least, not sensibly (to me, anyway).
Paying off my personal loan last month (I still have a mortgage) resulted in a FICO 8 drop. But it's far more important to me that I have an extra few hundred each month to do with as I see fit.
Fair Isaac rationalizes this by pointing out the stats showing that folks with an actively managed loan are less likely to default than folks without one.
Whatevah.
@LXRM36 wrote:I'm gonna try to sort of reply to all 5 replies thus far here.
I'm with ya on the simulators. Joke.
I have multiple loans remaining open, including two auto loans, one mortgage, and a home improvement loan.
I have multiple revolving lines of credit, which I'm paying down, but even the ones I zero out, I'm buying a tank of gas or a week of groceries to keep the card active with a balance I pay off each month.
I have one late from 2015 that is going to fall off later this year.
My aggregate is definitely +10%, actually much higher. Again, coming down and no where near what it was in 2020.
I'm not overly concerned with the drop, it's just frustrating. I had one balance go up $36, and my score increased. I paid this loan off, my score dropped. I decreased a balance on one card $350, my score increased. 🤷🏻♂️
It's all just very confusing.
Your confusion is totally understandable. Look at the utilization of loans the same as your utilization with credit cards -- you have aggregate and individual and there are separate scoring thresholds specifically for loan utilization.
In this case, your aggregate loan utilization changed with your payoff. If you were to compare the aggregate utilization of your loans prior to the payoff to the aggregate util of the remaining open loans post payoff -- it's possible (likely) the utilzation increased. For example:
Loan 1: 7000/10000
Loan 2: 5000/15000
Loan 3: 500/5000
Aggregate: 12500/30000 41.66%
Payoff 1 of those loans:
Loan 1: 7000/10000
Loan 2: 5000/15000
Loan 3: 0/0
Aggregate: 12000/25000 48%
Payoff 2 of those loans:
Loan 1: 7000/10000
Loan 2: 0/0
Loan3: 0/0
Aggregate: 7000/10000 70%
Either of the 2 payoff scenarios results in increased aggregate loan utilization which could negatively affect scoring.
I cannot say why you saw an increase with a credit card balance increase of $36... It's possible the score increase had nothing at all to do with the balance increase and a separate event simply coincided with the new balance reporting. If you were alerted to a balance increase and that alert was tagged with a resulting score change, please understand that the reason of the alert is not necessarily the reason for the change in score. The alert triggering event (balance change) simply prompted an updated score be pulled and presented to you.
Debt payoff is a good thing. Definitely keep doing the good thing.
@expatCanuck wrote:Excellent write-up.
TY!
@expatCanuck wrote:Oh, and I LOVE the tag on the BoA Americard in your sig. 👍
haha... it's been a year and 1 month and i'm still really annoyed with myself for app'ing it. AND... to further twist the knife... i have no CLI button - it has not appeared... not even once. And I refuse to call them about it.