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

[Anonymous]

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**?!?!?

[Anonymous]

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.

[SouthJamaica]

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@Anonymous 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**?!?!?

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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?

[joeyv1985]

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@Anonymous 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**?!?!

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 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. 

[Anonymous]

@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. 

[SouthJamaica]

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@Anonymous 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. 

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

[babygirl1256]

@Anonymous 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!!!