Paying off my car loan ruined my credit. Score dropped 70+ points.

[Anonymous]

My credit scores before paying off the loan were 685/673/680.  Now it's at 605/611/603. I'm actually sick.

I've just been set back years. What's the point of trying to cultivate good credit when you're punished like this?

[CashOnDelivery]

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@Anonymous wrote:

My credit scores before paying off the loan were 685/673/680.  Now it's at 605/611/603. I'm actually sick.

I've just been set back years. What's the point of trying to cultivate good credit when you're punished like this?

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This doesn't sound right. Are these FICO scores? Have you compared your reports before paying the loan and after?

[lg8302ch]

This could be the behavior of FAKO's. I do not have any loans and only credit cards therefore my FAKO scores are about 40-50 points lower than the real FICO's. Hope you looked at FAKO scores then I would say... relax and look at the real FICO scores. You might be surprised...Good luck!

[guiness56]

Paying off an installment loan should have minimal impact on your FICO score in either direction.  If it was your only installment loan, onces paid and closed you no longer have a mix of credit.

[FICOWolf]

I paid off my Installment loan and my FICO score dropped 16 points from 723 to 707.  I still have a very good mix credit with other installment loans (student loans). The only factor that must have changed my score is that of a Closed Account.  Such a Bummer!

[kkapdolee]

I've read similar stories in multiple places. I've posted here once how I'm purposely paying off a very small loan (<2k) slowly because I do not wish my score to drop and people started going crazy about how much wrong information is in this forum and how dumb it is to think the score should drop if loan is paid off.

To those people who swear that the score WILL NOT drop, have you guys actually paid off a loan before and seen your own scores unchanged or go up or are you guys just basing your "opinions" on what you "think" you know about FICO scores because I've seen a lot of people say their score dropped after a loan payoff but haven't seen anyone say the other way around. I'm about to payoff my small loan listening to your "advice" and I don't want to be another victim of misinformation.

[guiness56]

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@kkapdolee wrote:

I've read similar stories in multiple places. I've posted here once how I'm purposely paying off a very small loan (<2k) slowly because I do not wish my score to drop and people started going crazy about how much wrong information is in this forum and how dumb it is to think the score should drop if loan is paid off.

To those people who swear that the score WILL NOT drop, have you guys actually paid off a loan before and seen your own scores unchanged or go up or are you guys just basing your "opinions" on what you "think" you know about FICO scores because I've seen a lot of people say their score dropped after a loan payoff but haven't seen anyone say the other way around. I'm about to payoff my small loan listening to your "advice" and I don't want to be another victim of misinformation.

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I have seen some with drops, some increases, and some no score changes at all.  As with any FICO situation, anything is possible.

I don't think anyone would swear the score will not drop, no one knows for absolute sure.  Because an installment counts little toward your score in the first place, there should be little impact, one way or the other.    Everyones profile is different and is affected differently by different scenarios. 

IMO, it isn't misinformation, it is what happened to them and how an installment is scored in the first place.

Personally, I have paid off several installments and my score did not change at all.

[Kratos-TM]

I had 7 installments reporting a year ago. Everytime I paid one off, I gained 3 points. Now I'm down to 2 installments. I know for a fact that if I pay them off, the opposite will occur and I'd lose points. It all boils down to having that right number that matches your credit profile. Nothing more, nothing less....

[kkapdolee]

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@Kratos-TM wrote:

I had 7 installments reporting a year ago. Everytime I paid one off, I gained 3 points. Now I'm down to 2 installments. I know for a fact that if I pay them off, the opposite will occur and I'd lose points. It all boils down to having that right number that matches your credit profile. Nothing more, nothing less....

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How do you know "for a fact" that your score will go down?

Does the 3 point gain each time apply to the three FICO scores in your signature and each of them gained precisely 3 points?

This FICO thing is so confusing...