Paid off my Car Loan and FICO score went down!!

[Anonymous]

My bank has just reported that my car loan is paid off. At the same alert that I got from FICO saying that score went down!! Having hard time understanding scoring.

Last time when I spend $14 on my credit card (that has balance about $200) score went down due to "Excessive usage of credit"

[MarineVietVet]

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@Anonymous wrote:

My bank has just reported that my car loan is paid off. At the same alert that I got from FICO saying that score went down!! Having hard time understanding scoring.

Last time when I spend $14 on my credit card (that has balance about $200) score went down due to "Excessive usage of credit"

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Hello and welcome.

Was this your only installment loan? If so that could be the reason for the score decrease. A mix of differents kinds of credit (credit cards, morgages, car loans, etc.) is 10% of your total score.

Has anything else changed on your reports? It's often very difficult to know exactly why scores go up and down.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[llecs]

OP, which credit report or service did this alert come from?

[MarineVietVet]

I need to amend my other post. I said: Was this your only installment loan? If so that could be the reason for the score decrease.

After further research I found this information:

While both closed and open accounts are included in the mix, this doesn't mean that a closed auto loan or mortgage will always be as beneficial to your score as an open one.  So, for example, you're typically going to be better off having some closed auto loan or mortgage than none. But having at least one open is better.

So in other words closed accounts still count in the mix.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

Hi Gursoy,

and welcome!  Glad you're here!

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Gursoy wrote:

My bank has just reported that my car loan is paid off. At the same alert that I got from FICO saying that score went down!! Having hard time understanding scoring.

FICO scoring is brain-twistingly complex.  Because so much of it is not transparent, we mere mortals often connect score changes with the incorrect change point - we assume something because we don't know the entire FICO algorithm.  How much of a score variation did you see?  What items show up on your "What's Helping your FICO Score" and "What's Hurting your FICO score?"

Are you using Score Watch?  I have score alerts that I've learned to not necessarily associate with the most visible activities on my report.  Sometimes there's an aging issue with an account's age, with AAofA, with inquiry age, with aging of baddies......Sometimes there's a minor change on my report that I've overlooked.  And I've also come to understand that there's a bit of up and down to be expected.  My EQ FICO score varies within a ten point range - and has for the past 16 months.  When I was first rebuilding, this was stressful to me.  Now, it just seems like it's part of the process.  DH's score bounces within about a 30 point range.  Sometimes I can pin down the culprit (or angel) and sometimes I can't. 

Basically, the most helpful things to know about improving your score (avoid new debt, keep utilization low, pay on time) will keep you going in the same direction.  It's not guaranteed to be an arrow straight line on the chart, but you'll be going in the right direction.  On the other hand, if you're noticing a more significant score change, you'll want to double check your reports.  If you're puzzled, it's always helpful to pull a new report to see what's happening.

Hope that's somewhat helpful.

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