scores dropped after buying new car

Anonymous · ‎02-18-2017

QUESTION: Can any one tell me why my, scores dropped after buying a new car?

and will they go by up?

(Mod Cut-Im sorry personal info like this cannot be posted in the public forum, its for your protection.)

Anonymous · ‎02-18-2017

It's a new account, so it will drop, especially if you have a short AAOA. It will recover as you make on-time payments over the next handful of months.

newhis · ‎02-18-2017

Score could be affected by:

- HP for the loan

- Time of newest account too short

- Lower AAoA

- Maxed out account

As time passes and the balance gets lower you will get your points back and maybe some more. If this is your only loan, the max points it will give you is when the balance is less than 9%.

Anonymous · ‎02-18-2017

Can you tell us whether you already had an open installment loan? And if so, was a good chunk of it paid off?

If so, then getting a new auto loan would def cause your score to drop. Happy to explain why if you are interested.

PS. Also, can you tell us what you are using to monitor your scores? And what your score was and what it is now?

Anonymous · ‎02-18-2017

@Anonymous wrote:
QUESTION: Can any one tell me why my, scores dropped after buying a new car?

The simple reason is that you took on a sizeable debt. In doing so you are assuming more risk. Also, not to get hung up on language here, but it's important to clarify that "buying" a new car doesn't drop your score... financing a car however, that is, taking out a loan, raises risk which will drop your score.

As others have stated, any new account (not just a loan) is going to hit you with 3 "negative" scoring events. A credit inquiry, a "new account" and an AAoA drop. While each of these things is relatively insignificant in and of itself, when combined create the right ingredients to drop a score a bit for a relatively short amount of time (say 4-6 months).

Anonymous · ‎02-20-2017

I did have a previous loan of $4,025, but that was put into the new loan.

Score from TU dropped to 699 EQ:dropped down to 704 EX: dropped to 709

I am currently using myFICO to monitor my credit.

Anonymous · ‎02-20-2017

@Anonymous wrote:
I did have a previous loan of $4,025, but that was put into the new loan.
Score from TU dropped to 699 EQ:dropped down to 704 EX: dropped to 709
I am currently using myFICO to monitor my credit.

Great. As I guessed, you did have an open loan prior to taking out the loan for the new car. It sounds like the loan had a balance (an amount owed) of $4025. Is that right?

Can you tell us how much that loan was originally for? (I asked you whether your older loan had been mostly paid off. If you tell us the amount that the loan was originally for, as listed on the credit report, we can tell you exactly how much of it had been paid off just before you got the new car.)

And can you tell us two more things?

(1) How does the old loan appear now on your credit report? Is it listed as closed?

(2) How does the new loan read on your credit report? There should be two numbers: an original amount of the new loan and the current amount of the new loan. What are they?

When you give us these numbers, we can walk you through what happened and why your score has gone down.

SouthJamaica · ‎02-20-2017

@Anonymous wrote:
I did have a previous loan of $4,025, but that was put into the new loan.
Score from TU dropped to 699 EQ:dropped down to 704 EX: dropped to 709
I am currently using myFICO to monitor my credit.

Most likely is that the score drop is attributable to the substantial increase in open installment loan utilization percentage.

I.e. previously you had one mostly-paid-off installment loan. Now you have one loan with 100% utilization.