What the F!!!!

[Anonymous]

It's not rigged. If you go from having no open installment loan to having one (at high utilization) you get a slight score increase for having one. Then when it's almost paid off, you get a much greater score increase. Once it's closed, you've returned your profile to the same state it was originally in (no open installment loan) so it is viewed as it was prior to getting that installment loan [with respect to credit mix].

        My credit mix is "exceptional" I have other installment loans so the lease I just paid off should not have caused a 22 point drop. 

You bring up credit utilization. Utilization responds the same way. You just paid down your utilization from 75% to 20%. No doubt you saw a nice score increase from that. If you returned your profile to it's previous state, that is, taking your utilization back up from 20% to 75% no doubt you understand that your scores will drop by the amount they went up from your recent paydown. Why? Because you're returning your profile to the previous state that produced those scores. The same thing goes for an installment loan. There's no memory with these things. The algorithm can't say "well, he DID just pay down utilization from 75% to 20%, so we're still going to give him some credit for that even though his utilization is back up at 75% now."

     I did not get a nice bump in my score when I paid off 2 installment loans for flooring we just had put in. My score took an 18 point drop! THAT'S part of my frustration. Two $2,000 credit lines from Mohawk/Synchronicity went from $1500 and $1927 down to $400 each and my score Equifax score drops 18 points. That's not rigged? That's logical? Please explain that to me. 

Nothing here is rigged. You just need to be a bit more open minded and understanding of how the system works. The only thing "rigged" would be the gaming technique involving the SSL, which allows anyone to never lose points for paying off an installment loan, thus making this entire conversation/debate irrelevant.

     Do you work for one of the credit bureaus? It sure sounds like it. Look, I paid the last payment on one (my wife's even!) of my three auto loans because I had to and wanted to. And for that stellar record of paying on time (early) each month, I get a nice big "screw you Rick!" at the end in the form of a 22 point drop on my credit score. In what world is that fair or logical?

[Anonymous]

rickdeet understand your frustration as I took a 20+ point drop when I paid off a car loan and a Note Loan. Actually I was very mad. As has been explained in this thread it is how several of the Fico Score Models work so many MyFicoer's learn how to work around the Fico Score formula effects. Note, my scores dropped about the same with Equifax and Trans Union too. As has been explained for my credit profile my scores went up once I got my loans under 10% utilization. You can share your views (I do understand) but it won't change how some of the formulas work.

[Anonymous]

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@Anonymous wrote:

        My credit mix is "exceptional" I have other installment loans so the lease I just paid off should not have caused a 22 point drop. 

     I did not get a nice bump in my score when I paid off 2 installment loans for flooring we just had put in. My score took an 18 point drop! THAT'S part of my frustration. Two $2,000 credit lines from Mohawk/Synchronicity went from $1500 and $1927 down to $400 each and my score Equifax score drops 18 points. That's not rigged? That's logical? Please explain that to me. 

     Do you work for one of the credit bureaus? It sure sounds like it. Look, I paid the last payment on one (my wife's even!) of my three auto loans because I had to and wanted to. And for that stellar record of paying on time (early) each month, I get a nice big "screw you Rick!" at the end in the form of a 22 point drop on my credit score. In what world is that fair or logical?

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If you have other open installment loans and you received a 22 point drop for paying off one of them, it means your installment loan utilization went up.  Just like with revolving aggregate utilization, if installment aggregate utilization goes up across a threshold you're going to see a score decrease.  FICO scoring can only consider the open installment loan(s) you have on your credit report.  It looks first whether or not you have an open one, then if you do have an open one (or more than one) it looks at the amount you owe relative to the amount the loan(s) started at.  All it sees is the present and it does not take into account past (closed) installment loans.

I don't work for one of the credit bureaus, nor do I work for FICO which I believe is what you were trying to get at there.  I do however have a sound understanding of how the system works and rather than fight it I accept it and move on with life.  It's also important to understand that a 18-22 point drop is very insignificant in the grand scheme of things; you're talking 3%-4% of your score.  There are very few instances where a 3%-4% drop (or gain) in score would change the outcome of a credit application.

For the sake of discussion here, what do you think would be a logical way for the FICO algorithm to handle the paying off of an installment loan?  I get the impression that you believe it should increase you score.  Am I correct in suggesting that?  If not, please explain.  If so, to what degree should that help one's score?  Should someone get, say, 10 points added to their score for paying off an installment loan?  If I open up 10 BS installment loans and pay them all off right away, should I then get 100 points added to my FICO score?  Can you imagine the "gaming" that would go on if that were the case, and would that be logical?  I think before anyone takes the time to bash a current system, they should have a proposed alternative to that system ready to discuss.  I look forward to hearing yours.

[Anonymous]

For the sake of discussion here, what do you think would be a logical way for the FICO algorithm to handle the paying off of an installment loan? I get the impression that you believe it should increase you score. Am I correct in suggesting that? If not, please explain. If so, to what degree should that help one's score? Should someone get, say, 10 points added to their score for paying off an installment loan? If I open up 10 BS installment loans and pay them all off right away, should I then get 100 points added to my FICO score? Can you imagine the "gaming" that would go on if that were the case, and would that be logical? I think before anyone takes the time to bash a current system, they should have a proposed alternative to that system ready to discuss. I look forward to hearing yours.

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     I understand what you're saying and now that the sting of this slap in the face from the three credit bureaus has worn off a bit, I appreciate your insights. I would argue though, that a 22 point drop for someone hovering between 680 and 700 is much more significant than for someone at 780. 

     I don't propose a score increase for paying off a loan necessarily, but a 22 point drop is quite punitive to me when I had no choice but to pay the loan off, and had paid on time for the past three years, especially when not paying it probably wouldn't have been that much worse at probably close to a 30 point drop. A 5 point drop would be more reasonable for paying off a loan. 

     And I don't see how an 18 point drop after paying two cards down from $1900 and $1500 to $400 each (down to 20%) makes any sense whatsoever. Can you explain that?

     Before I started this, here we're my scores:

TransUnion: 666

Equifax: 677

Experian: 656

After paying off the auto lease and two credit cards from 75% to 20%, my score are now

TransUnion: 677

Equifax:666

Experian: 657

So, slight gain for TU and a drop for EQ for efforts that included dropping my utilization down to 20% on two cards, 0 on another and still waiting for my third (main card- $9500 Costco Citibank that went from $7200 to $2000 to report. That's a net "Suck it, Rick!", if you ask me. 

[Anonymous]

I hear what you're saying Brutal. And now that the sting from being slapped in the face by all three bureaus has worn off a little, I appreciate your insights.

I don't necessarily think a point increase should happen when an installment loan is paid off, but a 22 point drop is punitive to someone with a 680 score of lower. I understand that a 22 point drop doesn't hurt someone with a 780 score as much, but that's not me yet. Not paying the last payment on the lease was not an option, but had I done that, I probably would not have suffered that much more than paying it off on time. Maybe a 30 point drop?

Before making all these payments, I started with:

Here's the rub: I paid the last payment of an auto lease, paid 4 cards down to under 20% utilization (3 from 75% utilization, 1 from 50%) and I don't have that much to show for it because my scores were dropped so much and then added to. I am still waiting for my main card (Citibank Costo Card with a $9500 credit line) to report. Maybe that will help as I went from $8,000 to $2000 balance. But after all this, I half expect to get a 15 point dump across the board.

Can anyone explain these two scenarios:

1) Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1900 to $400 and my EQ score went from 677 to 659. Yay me!

2) Another Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1527 to $327 and my Experian score went from 666 to 662. Why? WHY? WHYYYYY?? (I know 4 points is negligible, but why a drop when I go from 76% utilization to 16%?

[Anonymous]

Apparently, all my replies are being rejected... whatever.

[Anonymous]

I hear what you're saying Brutal. And now that the sting from being slapped in the face by all three bureaus has worn off a little, I appreciate your insights.

I don't necessarily think a point increase should happen when an installment loan is paid off, but a 22 point drop is punitive to someone with a 680 score of lower. I understand that a 22 point drop doesn't hurt someone with a 780 score as much, but that's not me, yet. Not paying the last payment on the lease was not an option, but had I done that, I probably would not have suffered that much more than paying it off on time. Maybe a 30 point drop? 

Here's the rub: I paid the last payment of an auto lease, paid 4 cards down to under 20% utilization (3 from 75% utilization, 1 from 50%) and I don't have that much to show for it because my scores were dropped so much and then added to. I am still waiting for my main card (Citibank Costo Card with a $9500 credit line) to report. Maybe that will help as I went from $8,000 to $2000 balance. But after all this, I half expect to get a 15 point dump across the board.

Can anyone explain these two scenarios:

1) Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1900 to $400 and my EQ score went from 677 to 659. Yay me!

2) Another Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1527 to $327 and my Experian score went from 666 to 662. Why? WHY? WHYYYYY?? (I know 4 points is negligible, but why a drop when I go from 76% utilization to 16%?

[Anonymous]

Whether we admit it or not, we are all kind of like abused spouses who keep accepting whatever behavior our abuser puts on us because we don't have viable other options. We just accept mistreatment after mistreatment, irrational behavior, and nonsensical excuses because 'that's just the way it is'. As consumers, we're actually the ones with the power, but we (as a whole) abdicate that to our credit (lenders, cc's, and CRB's) overlords. Sadly, I don't think the collective of us has the guts or gumption to overthrow our rulers. 

[DollyLama]

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@Anonymous wrote:

Can anyone explain these two scenarios:

1) Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1900 to $400 and my EQ score went from 677 to 659. Yay me!

2) Another Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1527 to $327 and my Experian score went from 666 to 662. Why? WHY? WHYYYYY?? (I know 4 points is negligible, but why a drop when I go from 76% utilization to 16%?

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I hope we are discussing true FICO 8 scores, not Vantage scores. Assuming they are- Only 2 cards reporting a balance with this much lower utilization would not. So you look elsewhere. 

Any inquiries for either new credit card(s) or hard pull for a credit line increase(s)?

Are you carrying balances on more than just these two cards, if so what is your overall total aggregate utilization, and individual on those accounts? Did they increase?

Are you certain 1) EQ from 677-659 was not the car loan pay off updating to bureaus, and was only triggered by Synchroncity reporting your new balances reflecting 400 and 327?

Anything new appear, old/new collections/lates reporting monthly where as they were not before?

Compare your age of your oldest account on this report, compared to the one from previous report- look to see if an old paid/closed account aged off, reducing both the oldest age, and average age of accounts. 

So many factors......

[Anonymous]

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@Anonymous wrote:

1) Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1900 to $400 and my EQ score went from 677 to 659. Yay me!

2) Another Synchronicity / Mohawk Flooring credit card with $2000 limit. Went from $1527 to $327 and my Experian score went from 666 to 662. Why? WHY? WHYYYYY?? (I know 4 points is negligible, but why a drop when I go from 76% utilization to 16%?

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Under FICO scoring, neither paydown that you gave above could possibly lower your credit score.  The only time paying down a revolver would lower your credit score is if you paid it down to $0 and that resulted in ALL of your revolvers reporting $0 balances at the same time.  Since with both illustrations you gave above all you did was lower your balance(s), they would have still reported as positive (non-zero) balances and thus your scores cannot drop from that.  I'm not saying your scores didn't drop, I'm just saying it wasn't from paying down your cards.  Paying down utilization aside from all zero balances reported can only do one of two things to your score.  One, raise it.  Two, keep it exactly the same.  It would raise it if lowering the utilization resulted in crossing a utilization threshold.  If not, it would stay the same.