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Personal Loan payoff - score change?

expatCanuck
Super Contributor

Personal Loan payoff - score change?

I have a new mortgage (refi) from which my score has started to recover, and, for another month, a personal loan.  Final payment next month.

 

Thick, clean file.  Rarely does CC util exceed 1%.

 

When the loan is paid off, should I anticipate a score change and, if so. which way?


2022 Goal: save 3 months' net income


Starting FICO8: 666 (give or take)
EQ8305 INQ (1 CC, 2 mort, car, CU loan)7y6m
EX8026 INQ (4 CC, 2 mort)6y8m
TU8222 INQ (2 mort)6y3m
3/242/12AoYA 1m | AoOA 22.8y< 1%
[ Last INQ 14-Oct-2021 ]
Message 1 of 15
14 REPLIES 14
SouthJamaica
Super Contributor

Re: Personal Loan payoff - score change?


@expatCanuck wrote:

I have a new mortgage (refi) from which my score has started to recover, and, for another month, a personal loan.  Final payment next month.

 

Thick, clean file.  Rarely does CC util exceed 1%.

 

When the loan is paid off, should I anticipate a score change and, if so. which way?


Assuming your mortgage was much, much bigger than your personal loan, the payoff of the personal loan should have no effect.

 

But if that assumption is incorrect, in order to answer your question I would need to know the current balances and original loan amounts of all your open installment loans.


Total revolving limits 698000 (605000 reporting) FICO 8: EQ 721 TU 742 EX 715

Message 2 of 15
expatCanuck
Super Contributor

Re: Personal Loan payoff - score change?

Thanks, SJ.

 

Personal Loan was $15K, taken out two years ago next month (3-year loan paid off in two).

 

Mortgage is ~420K of which ~418 remain.


2022 Goal: save 3 months' net income


Starting FICO8: 666 (give or take)
EQ8305 INQ (1 CC, 2 mort, car, CU loan)7y6m
EX8026 INQ (4 CC, 2 mort)6y8m
TU8222 INQ (2 mort)6y3m
3/242/12AoYA 1m | AoOA 22.8y< 1%
[ Last INQ 14-Oct-2021 ]
Message 3 of 15
folks19
Frequent Contributor

Re: Personal Loan payoff - score change?

If that's your only non-mortgage installment loan, paying it off won't of a positive affect on your score, but you may not lose points either. It depends on other factors. If you do have other non-mortgage installment loan, than it depends on the the loan amounts and remaining balance. If, for example, you are paying off a small loan with a much larger loan amount, then that should only have a positive affect, but if the loan you're paying off is large compaired to the other, it may have a negative affect. In a nut shell.

Message 4 of 15
folks19
Frequent Contributor

Re: Personal Loan payoff - score change?


@SouthJamaica wrote:

@expatCanuck wrote:

I have a new mortgage (refi) from which my score has started to recover, and, for another month, a personal loan.  Final payment next month.

 

Thick, clean file.  Rarely does CC util exceed 1%.

 

When the loan is paid off, should I anticipate a score change and, if so. which way?


Assuming your mortgage was much, much bigger than your personal loan, the payoff of the personal loan should have no effect.

 

But if that assumption is incorrect, in order to answer your question I would need to know the current balances and original loan amounts of all your open installment loans.


I don't believe this is the case. I understood that mortgage loans are not calculated with other loans. By paying off yout only non-mortgage installment laon, you have 1 less active credit type, if that was the only non-mortgage installment laon.

Message 5 of 15
expatCanuck
Super Contributor

Re: Personal Loan payoff - score change?

I believe this to be the case as well.

 

But I think that having two different credit types is sufficient/optimal for the FICO score.

 

In this case, I'll still have revolving credit cards and a non-revolving mortgage.


2022 Goal: save 3 months' net income


Starting FICO8: 666 (give or take)
EQ8305 INQ (1 CC, 2 mort, car, CU loan)7y6m
EX8026 INQ (4 CC, 2 mort)6y8m
TU8222 INQ (2 mort)6y3m
3/242/12AoYA 1m | AoOA 22.8y< 1%
[ Last INQ 14-Oct-2021 ]
Message 6 of 15
SouthJamaica
Super Contributor

Re: Personal Loan payoff - score change?


@expatCanuck wrote:

Thanks, SJ.

 

Personal Loan was $15K, taken out two years ago next month (3-year loan paid off in two).

 

Mortgage is ~420K of which ~418 remain.


Then I expect the payoff of the personal loan to have no effect whatsoever on your scores, or to have a minor positive effect.

 

 


Total revolving limits 698000 (605000 reporting) FICO 8: EQ 721 TU 742 EX 715

Message 7 of 15
mimi64
Valued Member

Re: Personal Loan payoff - score change?



I don't believe this is the case. I understood that mortgage loans are not calculated with other loans. By paying off yout only non-mortgage installment laon, you have 1 less active credit type, if that was the only non-mortgage installment laon.


I'm not sure about that. We paid off our mortgage 8 years ago and I've achieved an 850 with just one active personal loan. When that loan was paid off, my score dropped.

Message 8 of 15
SouthJamaica
Super Contributor

Re: Personal Loan payoff - score change?


@mimi64 wrote:


I don't believe this is the case. I understood that mortgage loans are not calculated with other loans. By paying off yout only non-mortgage installment laon, you have 1 less active credit type, if that was the only non-mortgage installment laon.


I'm not sure about that. We paid off our mortgage 8 years ago and I've achieved an 850 with just one active personal loan. When that loan was paid off, my score dropped.


Yes, that's what I would expect.


Total revolving limits 698000 (605000 reporting) FICO 8: EQ 721 TU 742 EX 715

Message 9 of 15
800scoreplease
Valued Member

Re: Personal Loan payoff - score change?

I just lost 5 points when a student loan I had was paid off. The only other loans I have are a mortgage and another student loan with a small balance. Clean thick file.




Starting Score: 727
Current Score: 776
Goal Score: 805


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