@Anonymous wrote:
@thelethargicage wrote:Same thing happened to me when I paid of my car a few months ago. Fortunately, my score only dropped 5 points.
That makes me wonder how many open accounts you have versus the OP, and if you had say, a mortgage loan or other installment loan active, where the OP didn't.
Besides the car loan I paid off, I have 1 mortgage, 1 HELOC, and 9 credit cards. The HELOC is considered either a mortgage or a revolving depending on the CRA. The car loan was only installment account.
@taxi818 wrote:
@Anonymous wrote:I had read the credit bureaus liked to see installment credit. I paid off a new car over three years with last payment in August.and just lost 25 points. I am not planning on having any installment debt in the future. Are those 25 points gone forever? The loss of points were directly related to the loan being paid off according to Equifax. Is that big a drop normal?
It really has nothing to do with your car. it has more to do with credit mix which comprise 10% of your fico score in that catagory. there are many tricks to put installment loan back on your report if your goal is just to make sure you have the highest credit score at all times.
Example. i have $500 loan with my credit union. The terms are 3 years. So my payments are automatically withdrawn at $20 per month. which i don't even notice such a thing. hence giving me a installment loan. There are many others. That you can say take out 500 loan. pay 400 of it right away. and your next due date is 3 years away. hehehe. giving you the loan you need to max out score. But other ways to get the points in lower your utilization as well. no point of micro managing all this unless your scores so low and the approval would be borderline. 25 points is nothing in the bigger scheme of things.
25 points would've taken my mid-score from 722 to 697 and I assure you that's a wholesale difference in mortgage underwriting.
For CC's sure, whatever, but for more critical things 25 points or even 3 points in my above case have absurdly non-trivial impacts.
@Anonymous wrote:Thanks for the information. I don't need the 25 points for anything I am contemplating but it is nice to know there are options. Would you guess the fact I had no installment loans remaining was the major factor. If I had paid off one for example and had one remaining , what kind of score hit would I expect?
FICO 8: depends on the utilization of the other loans.
I did see a hit when my auto loan and one of my secured loans were paid across all bureaus on FICO 8 and I had two other open installment loans at the time; was something a shock since FICO 04 didn't behave that way.
Long details if you're interested: