Paid off car plunged.....

[Anonymous]

---

@egaithe wrote:

DH paid off his car it his score dropped 20 points! Assuming because an installment was paid off, but he still has the mortgage. What gives? 

---

This is very common and has happened to me a few times over the past 5 years. I paid off a $80,000 plus F350 a couple years back thinking I was going to build my credit scrore up. Nope!

Don't sweat it! The points come back over time and even faster if you purchase another vehicle. My experience is this.... never pay off a car, it will drop 20 points or even more sometimes.

[Anonymous]

---

@Anonymous wrote:

---

@SouthJamaica wrote:

---

---

I don't see why that would have caused that big a point loss, but I guess you must have crossed a threshold when you went from 75% installment utilization to 88.9% utilization. Presumably 80% was a threshold. But I would have thought you'd lose a couple of points, not 20.

---

I wouldn't think it would cause any point loss honestly, as both before/after installment loan utilization (aggregate) isn't "almost paid off."  My guess is that the OP lost points for a reason completely unrelated to installment loans... just perhaps he saw an alert for the paid off loan reporting but something else changed that wasn't alertable around the same time.

---

Hi SouthJ, BBS.  It would be interesting if you guys could get Thomas Thumb to chime in on this.  I have heard him stress more than once that there are FICO negative reason statements that specifically distinguish mortgage loan amounts from "non-mortgage" amounts.  It doesn't mean of course that they don't also have a third scoring factor that considers them all lumped together.  But the distinct language suggests, if I understand TT right, that they might also consider them separately.

If so, our OP had, before the payoff, open non mortgage loans with a utilization of < 8.9%, which would have given him a scoring bonus.  Then after payoff he had no N-M loans at all and lost the bonus.

This could be tested if we had a few different people with exactly one loan (a nearly paid off SSL) who then added a  new mortgage.  We'd expect their FICO 8 to take a sizable hit (aggregate installment utilization goes from 6% to 97% say).  But then the tester would pay off his SSL.  If there was zero scoring impact then the conjecture that FICO 8 has any scoring factor for specifically non-mortgage debt would be disproven.

[SouthJamaica]

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@SouthJamaica wrote:

---

---

I don't see why that would have caused that big a point loss, but I guess you must have crossed a threshold when you went from 75% installment utilization to 88.9% utilization. Presumably 80% was a threshold. But I would have thought you'd lose a couple of points, not 20.

---

I wouldn't think it would cause any point loss honestly, as both before/after installment loan utilization (aggregate) isn't "almost paid off."  My guess is that the OP lost points for a reason completely unrelated to installment loans... just perhaps he saw an alert for the paid off loan reporting but something else changed that wasn't alertable around the same time.

---

Hi SouthJ, BBS.  It would be interesting if you guys could get Thomas Thumb to chime in on this.  I have heard him stress more than once that there are FICO negative reason statements that specifically distinguish mortgage loan amounts from "non-mortgage" amounts.  It doesn't mean of course that they don't also have a third scoring factor that considers them all lumped together.  But the distinct language suggests, if I understand TT right, that they might also consider them separately.

If so, our OP had, before the payoff, open non mortgage loans with a utilization of < 8.9%, which would have given him a scoring bonus.  Then after payoff he had no N-M loans at all and lost the bonus.

This could be tested if we had a few different people with exactly one loan (a nearly paid off SSL) who then added a  new mortgage.  We'd expect their FICO 8 to take a sizable hit (aggregate installment utilization goes from 6% to 97% say).  But then the tester would pay off his SSL.  If there was zero scoring impact then the conjecture that FICO 8 has any scoring factor for specifically non-mortgage debt would be disproven.

---

OK why don't you do that and report back to us? 

[Anonymous]

---

@SouthJamaica wrote:

---

OK why don't you do that and report back to us? 

---

I'll be glad to... if I buy a house in the next 15 months, as seems fairly likely.

[SouthJamaica]

---

@Anonymous wrote:

---

@SouthJamaica wrote:

---

OK why don't you do that and report back to us? 

---

I'll be glad to... if I buy a house in the next 15 months, as seems fairly likely.

---

Well don't buy a house on our account