Paying Off Car Loan Lower FICO Score?

[sugarmagnolia23]

I just paid off 2 cars and got credit alert for the new 0 balances, but my score did not change at all.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Well if you pay off your car and it dosen't move then the only next logical thing to do it go buy a new motorcycle duh!!

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Let me forward that to my wife and see what happens. I made the terribly unfortunate mistake of promising never to buy a motorcycle as a condition of marriage, and I've since whittled it down to, "Once the kids are all in college."

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Hum, well maybe barder with her on a trip to Hawaii first then 6 months after that try the motorcycle thing again!  Can't hurt, or VEGAS!!!!

[R_W_]

I paid mine off recently (17 months early) and it dropped my FICO 75 points.  Check with your mortgage broker, but usually their practice is to exclude an intallment loan from you DTI ratio as long as it has less than 6 payments remaining inn teh balance.  If that is the case, just pay off all but 6 payments worth.  Good luck!

[pizzadude]

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@R_W_ wrote:

I paid mine off recently (17 months early) and it dropped my FICO 75 points.  Check with your mortgage broker, but usually their practice is to exclude an intallment loan from you DTI ratio as long as it has less than 6 payments remaining inn teh balance.  If that is the case, just pay off all but 6 payments worth.  Good luck!

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There's no way that paying an installment loan would drop a FICO score by 75 points ~ there would have to be other factors at play.    What else on your reports changed ?

[MarineVietVet]

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@pizzadude wrote:

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@R_W_ wrote:

I paid mine off recently (17 months early) and it dropped my FICO 75 points.  Check with your mortgage broker, but usually their practice is to exclude an intallment loan from you DTI ratio as long as it has less than 6 payments remaining inn teh balance.  If that is the case, just pay off all but 6 payments worth.  Good luck!

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There's no way that paying an installment loan would drop a FICO score by 75 points ~ there would have to be other factors at play.    What else on your reports changed ?

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I have to agree. In many cases there is no change whatsoever after an installment loan is paid off/closed and it's only a few points lower when it does change because closed accounts are still counted in your credit mix.. There is something else that caused such a large score drop.

[R_W_]

Yes... that is what I thought and I have been trying to dispute it for over a month.  This was an account that had been 30 days once in 2009, when I paid it off it changed teh status from pays as agreed to 30 days past due.  My theory is that  FICO is looking at it as if it was recently late.  The other bureaus say "paid, was 30 days past due" and they seem to have had a small increase on the same day the EQ FICO dropped 75 points.  When I called my FICO and equifax, they agreed and helped me with a dispute 3 times, but it doesn't seem to clear it up... it still reads as a recent late pay instead of >3 years old.... I have written a letter to the lender and am waiting to see if they do anything to correct it......grr....

[Max-1]

I paid off an auto installment loan in Oct (5yr loan, paid as agreed, no late payments) and my FICO score just dropped 35 points. The only other things that would have changed since then are "A" or better payments on the couple of accounts I have.  I asked customer support why FICO was penalizing me for paying off an installment loan... no answer.  Anyone have any ideas what recourse, if any, I may have?

[Max-1]

Maybe not 75 points, but my score just dropped 35 pts after paying off 5-yr car loan (at terms).  No other negative factors at play. Making "A" or better payments on the couple of revolving credit accts I have.  FICO apparently considers me less credit-worthy now than when I had the loan.  Ironically, if I wanted to apply for another car loan, I could pay more interest now than before.

[Creditwiser]

I have a new loan that has not reported yet. Paid off the old one last month and I lost 12pts on EX , 10 on TU.  EQ took 12 pts as well but the next day I gained 5 back.  All I can hope for now is when the new loan begins to report I dont get hit with more point drops.

[MarineVietVet]

There seems to be more and more evidence that FICO 08 does not like zero installment loans reporting.

I may have to change my mantra that credit mix does not matter all that much; at least in the eyes of FICO 08.

But I still say that being debt free is always my #1 goal.