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Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!

krit
Contributor

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!


@Diva365 wrote:

Thanks for the advice. Pardon my ignorance but what is a SSL?


 

It's a share secure loan, or savings secure loan. 

Message 11 of 18
Diva365
Established Member

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!

Thanks Smiley Happy I'll look into that
Message 12 of 18
Diva365
Established Member

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!

Thanks for the feedback. My Auto lease was my only installment loan. The rest of my debt is credit card which is mostly <10% UTI. I just paid a balance on one of my cards and my score dropped yet again. I'll have to educate myself more on credit--Score 8,9,5,3 I'm so confused!! But I'm happy that there are forums such as this to help navigate this credit thing. 

Message 13 of 18
SouthJamaica
Mega Contributor

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!


@Diva365 wrote:

Thanks for the feedback. My Auto lease was my only installment loan. The rest of my debt is credit card which is mostly <10% UTI. I just paid a balance on one of my cards and my score dropped yet again. I'll have to educate myself more on credit--Score 8,9,5,3 I'm so confused!! But I'm happy that there are forums such as this to help navigate this credit thing. 


If it was your only installment loan, then you experienced the 'no open loan' penalty.  It affects FICO 8's and 9's noticeably, but usually has little or no repercussion in your mortgage scores.

 

With revolving accounts, if you have all balances reporting zero, you experience an "all zero" penalty. This is easily cured by letting one bankcard report a small balance before you pay it off.

 

These are both dumb penalties, in my book, but they are what they are.  FICO insiders justify them by saying that statistically, people who have small balances are less likely to some day default than people with zero balances. I don't believe it; I think the penalties are calculated to weed out people who abhor borrowing, because they are less likely to be profitable banking customers.


Total revolving limits 684000 (587000 reporting) FICO 8: EQ 715 TU 712 EX 695

Message 14 of 18
4sallypat
Valued Contributor

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!


@Diva365 wrote:

Thanks for the feedback. My Auto lease was my only installment loan. The rest of my debt is credit card which is mostly <10% UTI. I just paid a balance on one of my cards and my score dropped yet again. I'll have to educate myself more on credit--Score 8,9,5,3 I'm so confused!! But I'm happy that there are forums such as this to help navigate this credit thing. 


This happened to me at the time I was qualifying for a mortgage loan too.

 

My scores went back up after a month and then paying off credit card debt down to 6% really bumped my 5,4,2 mortgage scores.

 

Had to have my mortgage broker do a rapid rescore after paying off the Amex POT and other cards that he suggested using a credit simulator tool.

 

Closing escrow next week on our first home!

Message 15 of 18
Diva365
Established Member

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!

Thanks for your input and explanation. I understand. But it's like I've work so hard to maintian and pay off debt to only get dinged for it!! que sera!!

Message 16 of 18
Diva365
Established Member

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!

Thanks for your post and congrats on your new home!!! I'm under contract and crossing my fingers that everything goes well. Just don't know what to expect! i went from pre-approval to loan approved but I hear that there is more to it. I'm thinking of all the scary stories of score changing in turn changing my approval status, while under contract Smiley Sad 

Message 17 of 18
Diva365
Established Member

Re: Why did my credit drop -21 after paying off my auto lease. Never missed a payment!!

Hope you are enjoying the home!

Message 18 of 18
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