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Paid off my car, Fico8 dropped 15 points... WHY?

Stewi15
Valued Member

Paid off my car, Fico8 dropped 15 points... WHY?

Paid off the car last month and I just got an update that my loan was showing paid off on my EX8 score along with a 15 point drop. I have open good standing revolving CC accounts and an open good standing mortgage account. Am I being penalized for not having a non-mortgage installment loan? If so.... **bleep**?!?!?

Message 1 of 7
6 REPLIES 6
ImTheDevil
Community Leader
Super Contributor

Re: Paid off my car, Fico8 dropped 15 points... WHY?

Likely the B/L of the car loan and mortgage together was lower than that of the mortgage itself. Now that the car loan is paid off, your installment utilization percentage would be higher. In that scenario it can cost you points. We see this a lot from members here - it's an unfortunate fact of how the scoring is calculated.



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Message 2 of 7
SouthJamaica
Super Contributor

Re: Paid off my car, Fico8 dropped 15 points... WHY?


@Stewi15 wrote:

Paid off the car last month and I just got an update that my loan was showing paid off on my EX8 score along with a 15 point drop. I have open good standing revolving CC accounts and an open good standing mortgage account. Am I being penalized for not having a non-mortgage installment loan? If so.... **bleep**?!?!?


What was the loan amount, and the balance prior to the payoff?

 

What was the original mortgage amount, and what is the present mortgage balance?


Total revolving limits 677500 (584500 reporting) FICO 8: EQ 758 TU 777 EX 749

Message 3 of 7
joeyv1985
Frequent Contributor

Re: Paid off my car, Fico8 dropped 15 points... WHY?


@Stewi15 wrote:

Paid off the car last month and I just got an update that my loan was showing paid off on my EX8 score along with a 15 point drop. I have open good standing revolving CC accounts and an open good standing mortgage account. Am I being penalized for not having a non-mortgage installment loan? If so.... **bleep**?!?!


 I had a 5-year car loan that I paid off in 3 years. 2-3 months ago my FICO 8's dropped 11-18 points. My mortgage was the only open installment loan, however, the mortgage was taken out 2 years ago so it shows that my balance is still relatively high. The goal for the next 2 years is just to make extra principal payments. Credit utilization is below 10% for my CC's. You feel like you're doing the right thing, which you are by helping your DTI ratio, and the system punishes you for paying a off loan in good standing. By paying off that loan, the algo's flipped on you. Nothing you can do. In due time, those points will come back. 

Message 4 of 7
Stewi15
Valued Member

Re: Paid off my car, Fico8 dropped 15 points... WHY?

@SouthJamaica The car "loan" was a lease. The original reported balance was $14k and I had only about $2k left on it when I paid it off in full. The mortgage is only 6 months old, so the balance is still 98% of the original loan amount. I guess my only recourse to grab some points back is to pay my revolving UT down now, which I'm around 26% aggregate UT. I gotta get my scores back into prime range before I lease another car in a few months. 

Message 5 of 7
SouthJamaica
Super Contributor

Re: Paid off my car, Fico8 dropped 15 points... WHY?


@Stewi15 wrote:

@SouthJamaica The car "loan" was a lease. The original reported balance was $14k and I had only about $2k left on it when I paid it off in full. The mortgage is only 6 months old, so the balance is still 98% of the original loan amount. I guess my only recourse to grab some points back is to pay my revolving UT down now, which I'm around 26% aggregate UT. I gotta get my scores back into prime range before I lease another car in a few months. 


Yes paying down your revolving accounts is the best bet for picking up points.


Total revolving limits 677500 (584500 reporting) FICO 8: EQ 758 TU 777 EX 749

Message 6 of 7
babygirl1256
Valued Contributor

Re: Paid off my car, Fico8 dropped 15 points... WHY?

@Stewi15 Gosh, sorry that your scores dropped . . . I am seeing score-dropping posts more frequently and I am really going to have to watch that as I approach pay-off for my SUV. Thanks for posting -and- hopefully your point recovery will be soon!!!

Starting FICO 8 Score in 06/2019: EQ-625, TU-649, EX-640
Current FICO 8 Score in 06/2021: EQ-796, TU-806, EX-812
Goal FICO 8 Score in 06/2022: EQ-825, TU-850, EX-850
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