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loan paid off. down 13

expatCanuck
Super Contributor

loan paid off. down 13

Well.

That's annoying.

 

Paid off my personal loan (but still have a mortgage).  Other than a whack of recent pulls, thick clean file.

 

EX FICO 8 dropped from 808 to 795.  The other two bureaus really didn't care. (ETA - they in fact subsequently dropped 8 or 9 point).

 

FICO.

 

[aside - I paid off the 3-year loan a year early - wasn't gonna pay interest on $400 for a year - fiscal sense > FICO score]


2022 Goal: save 3 months' net income

Starting FICO8: 666 (give or take)  [ Last INQ 15-Mar-2022 ]
EQ8145 INQ (2 CC 2 mort, car)7y0m
EX7986 INQ (4 CC, 2 mort)6y11m
TU8272 INQ (2 mort)6y5m
4/243/12AoYA 2m | AoOA 23y4m< 1%
Message 1 of 10
9 REPLIES 9
SouthJamaica
Mega Contributor

Re: loan paid off. down 13


@expatCanuck wrote:

Well.

That's annoying.

 

Paid off my personal loan (but still have a mortgage).  Other than a whack of recent pulls, thick clean file.

 

EX FICO 8 dropped from 808 to 795.  The other two bureaus really didn't care.

 

FICO.

 

[aside - I paid off the 3-year loan a year early - wasn't gonna pay interest on $400 for a year - fiscal sense > FICO score]


Paying off the loan would not normally cause a score drop, unless the payoff caused your aggregate installment utilization percentage to go over 10% from below 10%.


Total revolving limits 689000 (587000 reporting) FICO 8: EQ 718 TU 721 EX 698

Message 2 of 10
dragontears
Senior Contributor

Re: loan paid off. down 13


@SouthJamaica wrote:

@expatCanuck wrote:

Well.

That's annoying.

 

Paid off my personal loan (but still have a mortgage).  Other than a whack of recent pulls, thick clean file.

 

EX FICO 8 dropped from 808 to 795.  The other two bureaus really didn't care.

 

FICO.

 

[aside - I paid off the 3-year loan a year early - wasn't gonna pay interest on $400 for a year - fiscal sense > FICO score]


Paying off the loan would not normally cause a score drop, unless the payoff caused your aggregate installment utilization percentage to go over 10% from below 10%.


This is what everyone always says but for me, every time I pay off a loan my FICO8 drops 5-10 points and I have an open mortgage that is only 3% paid off that makes the utilization of the smaller loans a non-factor in total loan utilization. 

 

Message 3 of 10
expatCanuck
Super Contributor

Re: loan paid off. down 13


@dragontears wrote:

@SouthJamaica wrote:

@expatCanuck wrote:

Well.

That's annoying.

 

Paid off my personal loan (but still have a mortgage).  Other than a whack of recent pulls, thick clean file.

 

EX FICO 8 dropped from 808 to 795.  The other two bureaus really didn't care.

 

FICO.

 

[aside - I paid off the 3-year loan a year early - wasn't gonna pay interest on $400 for a year - fiscal sense > FICO score]


Paying off the loan would not normally cause a score drop, unless the payoff caused your aggregate installment utilization percentage to go over 10% from below 10%.


This is what everyone always says but for me, every time I pay off a loan my FICO8 drops 5-10 points and I have an open mortgage that is only 3% paid off that makes the utilization of the smaller loans a non-factor in total loan utilization. 


That's my experience as well.  I refi'd my mortgage in September.  The value of the personal loan was ~3% of my mortgage.  Without the loan, aggregate installment util is ~99%; with the loan, ~96%.

 

Bottom line: my monthly DTI is better (because I no longer have an additional monthly $450 payment), and my FICO score goes down.  That logic is whack.


2022 Goal: save 3 months' net income

Starting FICO8: 666 (give or take)  [ Last INQ 15-Mar-2022 ]
EQ8145 INQ (2 CC 2 mort, car)7y0m
EX7986 INQ (4 CC, 2 mort)6y11m
TU8272 INQ (2 mort)6y5m
4/243/12AoYA 2m | AoOA 23y4m< 1%
Message 4 of 10
SouthJamaica
Mega Contributor

Re: loan paid off. down 13


@dragontears wrote:

@SouthJamaica wrote:

@expatCanuck wrote:

Well.

That's annoying.

 

Paid off my personal loan (but still have a mortgage).  Other than a whack of recent pulls, thick clean file.

 

EX FICO 8 dropped from 808 to 795.  The other two bureaus really didn't care.

 

FICO.

 

[aside - I paid off the 3-year loan a year early - wasn't gonna pay interest on $400 for a year - fiscal sense > FICO score]


Paying off the loan would not normally cause a score drop, unless the payoff caused your aggregate installment utilization percentage to go over 10% from below 10%.


This is what everyone always says but for me, every time I pay off a loan my FICO8 drops 5-10 points and I have an open mortgage that is only 3% paid off that makes the utilization of the smaller loans a non-factor in total loan utilization. 

 


Well I side with the majority on thatSmiley Happy


Total revolving limits 689000 (587000 reporting) FICO 8: EQ 718 TU 721 EX 698

Message 5 of 10
expatCanuck
Super Contributor

Re: loan paid off. down 13

Postscript:

Email from Chase about positive changes in my credit history.  I log in to Credit Journey.

 

You paid off your account. Great!

Your total revolving balance has dropped. Terrific!

 

Oh, and your score is down 16.  Thanks for playing our game.  Have a nice day.

 

<smh>


2022 Goal: save 3 months' net income

Starting FICO8: 666 (give or take)  [ Last INQ 15-Mar-2022 ]
EQ8145 INQ (2 CC 2 mort, car)7y0m
EX7986 INQ (4 CC, 2 mort)6y11m
TU8272 INQ (2 mort)6y5m
4/243/12AoYA 2m | AoOA 23y4m< 1%
Message 6 of 10
SouthJamaica
Mega Contributor

Re: loan paid off. down 13


@expatCanuck wrote:

Postscript:

Email from Chase about positive changes in my credit history.  I log in to Credit Journey.

 

You paid off your account. Great!

Your total revolving balance has dropped. Terrific!

 

Oh, and your score is down 16.  Thanks for playing our game.  Have a nice day.

 

<smh>


Isn't that a Vantage score, rather than a FICO score?


Total revolving limits 689000 (587000 reporting) FICO 8: EQ 718 TU 721 EX 698

Message 7 of 10
expatCanuck
Super Contributor

Re: loan paid off. down 13

Indeed it is.  But the logic is still whack -- at the upper end, fiscal optimization != FICO optimization.

 

It reminds me of the BMI measure, which completely ignores the difference between fat and muscle.  But that's a discussion for a different forum.


2022 Goal: save 3 months' net income

Starting FICO8: 666 (give or take)  [ Last INQ 15-Mar-2022 ]
EQ8145 INQ (2 CC 2 mort, car)7y0m
EX7986 INQ (4 CC, 2 mort)6y11m
TU8272 INQ (2 mort)6y5m
4/243/12AoYA 2m | AoOA 23y4m< 1%
Message 8 of 10
expatCanuck
Super Contributor

Re: loan paid off. down 13

Absent financial catastrophe, my EX FICO 8 Will indeed be back up to 82x before year-end.

 

I'm just venting because it's fallen below 800 for the first time in years (and I do so like that darker green).


2022 Goal: save 3 months' net income

Starting FICO8: 666 (give or take)  [ Last INQ 15-Mar-2022 ]
EQ8145 INQ (2 CC 2 mort, car)7y0m
EX7986 INQ (4 CC, 2 mort)6y11m
TU8272 INQ (2 mort)6y5m
4/243/12AoYA 2m | AoOA 23y4m< 1%
Message 9 of 10
K-in-Boston
Moderator

Re: loan paid off. down 13

I think there may also be differing score factors for mortgages and other types of loans so you may be getting the no installment penalty (or some other credit mix metric) even with the mortgage open.  When I refinanced my student loan a couple of years ago, the previous loan reported closed before the new one reported and I took a bit of a dip that came right back when the new loan reported.  Mortgage was the only other type of open installment loan reporting.

 

More painfully, I am a fellow September refinancer, and it was absolutely crazy to watch no score change at all when my new 100% balance-to-original-amount mortgage reported alongside my 90% balance mortgage.  Then a few weeks later the previous mortgage reported as paid and closed and my FICO 8 scores dropped 22-35 points! Smiley Surprised  Add hundreds of thousands in "new" debt, no change.  "Pay off" hundreds of thousands of dollars in debt, high risk!  The points have been trickling back in as the loan balance has gone under 100%, but it's just one of those crazy head-shaking algorithm moments.

Message 10 of 10
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