Why and How did my score plummet???

[MB2714]

I recently got an auto loan, and a signature loan to consolidate all my credit cards. My score was 684 at auto, 640 at signature loan signing. Then my credit union needed to pull my credit report to evaluate my debit card purchase limit because they base your debit card limits on credit. They said my score dropped to 577. All these reports that were pulled were Transunion. I contacted Transunion they said your score drops significantly when you get an installment loan. Since I got two within 60 days my score dropped over 100 points. They said it wasnt the inquiries or the card balances which show paid zero balance. I was told i have to start paying the two installment loans and my score will be back where it was in 6 ,months. Can someone please explain why this happens, if you have paid credit card debt.

[blondy250]

New tradlines, plus probably numerous new inquiries associated with them. Also you will get a drop if you pay off all your cards, FICO likes you to have at least 1 card report a balance. 

[user5387]

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@Kalamazoo2714 wrote:

I recently got an auto loan, and a signature loan to consolidate all my credit cards. My score was 684 at auto, 640 at signature loan signing. Then my credit union needed to pull my credit report to evaluate my debit card purchase limit because they base your debit card limits on credit. They said my score dropped to 577. All these reports that were pulled were Transunion. I contacted Transunion they said your score drops significantly when you get an installment loan. Since I got two within 60 days my score dropped over 100 points. They said it wasnt the inquiries or the card balances which show paid zero balance. I was told i have to start paying the two installment loans and my score will be back where it was in 6 ,months. Can someone please explain why this happens, if you have paid credit card debt.

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If you open new accounts, with corresponding hard pulls and decreased AAoA, this can hurt your scores.

But 100+ points seems kind of extreme.  Are there any further details you can offer us?

Are you sure that the same TU scoring model was used for all the scores?  If not, then the scores may not be comparable.  As an example, this site offers TU 98, and my Discover card gives me TU 08 on a monthly basis, and these are different flavors of TU.

[Revelate]

To add to the negative damage done by inquiries and new tradelines; you also have to consider the fact that it may not have been the same model of pull.

Auto Enhanced scores (for your car loan potentially) if you've had a successfully paid-on-time auto loan in the past, can often by higher than a classic FICO score because not only do they weight it differently, it's out of a higher range anyway.

There's unfortunately a slew of different FICO scores even from Transunion alone, and unless you're comparing identical scores it's hard to pull a meaningful response out of it but I don't think your score dropped 100 points just from new accounts and inquiries alone: most likely you had an auto-enhanced pull vs. a different industry option on the second and third ones.  

[MB2714]

I am not sure which model I do know Transunion was used each time which is the primary bureau in Michigan used

[Revelate]

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@Kalamazoo2714 wrote:
I am not sure which model I do know Transunion was used each time which is the primary bureau in Michigan used

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If they give you score ranges on the score they gave, you might be able to pick it out (or post here and we'll try to pick it out for you).

Anecodtally no matter how many inquiries and new accounts you add, it'd be tough to drop from a 684 classic model to 587 in a short time period without additional negative information being added unless you had an incredibly thin report to begin with.  100 points is a lot, and it's rare for even higher scored people to move that much when performing such actions.

Likely it was a different model used; who did you get the first score through for the auto loan?