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Score dropped after paying off mortgage

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nzbgsf
Established Member

Score dropped after paying off mortgage

We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.

Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advanceSmiley Happy

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dragontears
Senior Contributor

Re: Score dropped after paying off mortgage


@nzbgsf wrote:

We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.

Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advanceSmiley Happy


Which scoring model? 

Message 2 of 5
nzbgsf
Established Member

Re: Score dropped after paying off mortgage

Version 8


@dragontears wrote:

@nzbgsf wrote:

We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.

Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advanceSmiley Happy


Which scoring model? 


Version 8

Message 3 of 5
coldfusion
Community Leader
Mega Contributor

Re: Score dropped after paying off mortgage

FICO scores factor in whether or not there is an open installment loan like a mortgage or auto loan reporting, and if so it also takes into account the percentage of the original loan amount still outstanding. That 24 point loss is consistent with having just closed one's last installment loan.

 

This isn't a derog, it's just a factor of how scoring models work.

 

(11/2024)
FICO 8 (EX) 850 (TU) 850 (EQ) 850
FICO 9 (EX) 850 (TU) 850 (EQ) 850

$1M+ club

Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion
Message 4 of 5
SouthJamaica
Mega Contributor

Re: Score dropped after paying off mortgage


@nzbgsf wrote:

We've been super diligent after selling our home. We immediately paid off $30k in card debt, $200k HELOC and $430k first mortgage. Applied for a new mortgage to buy a new home.

Over the past few weeks our scores went from the high 600's to mid 700's as our utilization % was hurting the scores. A couple of days ago my wife's TU hit a high of 775, a day later after recording our home loan paid off her TU score dropped by 24 points. Do you guys know why her score would take such a big hit after we paid off our largest liability?? It makes little sense to us. Thanks in advanceSmiley Happy


If she had no other installment loans open, it was probably because she experienced the 'no open loan' penalty, which typically hammers FICO 8's and 9's.   But if you check her mortgage scores, I wager you'll see little or no corresponding decrease there.

 

Once all the changes have reported, you should both be pulling MyFICO's 3-bureau report, so you'll know where your mortgage scores are.


Total revolving limits 586020 (520820 reporting) FICO 8: EQ 710 TU 711 EX 715




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