My Credit Score DROPPED After Paying Off Car Loan 😲 (Why Scores Tank After Auto / Mortgage Payoff)

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[@ProudMoney]

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[@rolemodel333]

Lost 56 points after paying off my 5 year car loan….. I hate this country

[@douglasfoley2060]

Makes perfect sense. You do a good thing, pay off a debt, and you get punished for it……because how dare you not owe us anymore money!

[@chrisbrown8748]

It’s always the friends that don’t understand credit that tell me “I’m about to payoff this loan and that will definitely help my credit score” and I’m like nooooo the opposite is actually true.

[@chrisgreene123]

I’m always like “let it drop and give me that money back in my budget…” 😂😂

[@robertsaladino]

You defending the Fico score is ridiculous. Paying off debt should always be rewarded, not punished.

[@ProudMoney]

Not defending it, just explaining how it works and why. Credit scores were not created to help consumers, they were created to help lenders decide, on average, how risky a person is based on their past behavior (when compared to the past behaviors of millions of other people with similar credit histories). FICO's customer is the bank, not you, which is what most people don't understand.

[@scarling9367]

@@ProudMoney Paying off debt - so risky. 😆😅🤣

[@themercedestraveler9566]

​@ProudMoney can you explain how a paid off auto loan signals risk to lenders?

[@yoreljm]

FICO is supposedly about predicting default, not about punishment and reward. Lenders use it as an excuse to charge high interest.

[@joyjoy1236]

​@@ProudMoney There punishing people for having good financial habits. Say that because it makes sense and the people are not morons.

[@jinx710]

It makes zero sense honestly. I did what I was supposed to do and it was punished

[@Brownwaffles]

Penalty for being disciplined for paying on time and fulfilling our end of deal is B.S period

[@anthonyocegueda3461]

I lost 70 points went from a 750 to a 680 which is insane cause I was paying two months early and paid my car off 10 months in advance

[@pattym307]

My 745 dropped to 675. So upset. Haven't been in the 600s in several years

[@ccrobinson545]

​@pattym307 same thing happened to me

[@dougrobinson5830]

Mo too!

[@floydbanks173]

I had reached the top of the mountain, THAT PEREFECT 850. Then for my 60th birthday, I paid the mortgage off. Poof..... Down 25 points ON THE Big 3. Since that was my only installment loan, there wasn't any real recovery after a few months. I wasn't applying for anything. No negatives were coming. In the 4 years since then, one card was added in 2020 & another in 2021. Nothing really changed until this year give or take up or down a couple of points here & there. This year I finally got 10 points or so across the board on the three FICO 8's. Those perfect 850's are much more attainable in FICO 9 &10T.

[@mitchellmullins6650]

This almost makes me want to go out and try to get a big loan for 5-6 years, reconfigure it from time to time, keel over in 20 years ( my family doesn`t live long ) and not worry about it. Knowing my luck though, I`ll live to 100 and be screwed

[@Bxr400]

The banks whole idea is to put and keep u and the people it serves in debt for as long as they can. The longer ur in debt, the more money they make. And if u die in debt, they will write it off and STILL get their money AND then some!!!.

[@Xtremeproducts]

It’s been a while but I’m back. This is facts. I had to pay off my vehicle last year before I could proceed with the purchase my home. Score dropped 65 points. I was shocked.

[@grumpygrump2639]

I made sure to pay off my vehicle 6 months before applying for a mortgage. Though I get that not everyone may be in a position to plan that far ahead. Also closed a credit card, opened a new credit card and had high utilization on one card for that same month (which I paid off in full and on time). By the time I applied for the mortgage my credit score was right back where it was before paying off the car loan.

[@Xtremeproducts]

@@grumpygrump2639 dats a good strategy

[@kerilynnae5551]

The reason you provided as to why our scores drop for paying off a loan proves that this whole credit system is designed to keep you in debt. It is completely unfair that we're penalized for other people's behavior.

[@grumpygrump2639]

No, I completely disagree. If they had to evaluate every person on an individual basis the cost of using credit would be much higher for everyone. It's easy to get a good credit score and even to maintain. Temporary drops are nothing to get upset about in my experience.

[@mustangecoboosthpp3869]

You are 100% correct, FICO is a scam designed to keep people in debt in order to have high credit scores.

[@mustangecoboosthpp3869]

@@grumpygrump2639 That is complete BS, every loan you take out you are checked before the loan is approved or denied, FICO is a scam designed to keep people in debt.

[@michaelswami]

I recently experienced the same thing when I paid off all my credit cards. I had $80 report last month, then paid all the balances to zero. This was on a 58,500 total of revolving credit card available. Score dropped 15 to 30 points across the board. I was so much less of a credit risk when my credit utilization was 80/58500 than when I was 0/58500. He said facetiously.

[@grumpygrump2639]

It's been 2 months. Where's your score at now? I just don't sweat small changes at all.

[@michaelswami]

@@grumpygrump2639 it’s it’s probably back where it was when this happened. I don’t sweat it either. I just think it’s a little bit counterintuitive. note that I allow a small balance to report every month

[@mykh79]

Same thing happened to me. 6 cards reporting 0, 1 card reporting $10 last month. This month all 7 report 0. FICO dropped 17 points.

[@michaelswami]

@@mykh79 it literally just happened to me again today. 21 and 22 point FICO 8 drop because I paid all to zero.

[@maritestaylor8458]

Thanks for letting us know 😊😊😊

[@cardojp]

Gotta love that algorithm. When someone is that disciplined to having an almost perfect score, they shouldn't even have to experience a nose dive like that. Great content as always, thanks Adam!!!

[@HCheatNcool]

The credit score is meant to keep you in bondage, of course, they punish you when you do something which is in your financial interest rather than theirs

[@mustangecoboosthpp3869]

BINGO FICO is a scam, it is designed to keep you in debt in order to have a high credit score.

[@heatherann4390]

Umm NO. I'm pretty sure it's to keep people in debt.

[@mustangecoboosthpp3869]

BINGO, FICO is a scam, it is designed to keep you in debt in order to have a high credit score.

[@DoorDashers791]

It happened to me it's designed to keep you in debt.

[@Adiscretefirm]

Credit rating agencies don't care or benefit from you being in debt

[@Bxr400]

And to scam you over!!!

[@Bxr400]

@@Adiscretefirm ever had a credit bureau tell you that you are pre qualified or pre approved for a credit card? They get compensated when u get that card. It’s a business….. and NO one is in business not to make money.

[@Adiscretefirm]

@@Bxr400 no, I have never had a credit bureau offer me a card or any pre approval. I have had credit card issuing banks offer, and I have seen the paid referral program on credit monitoring apps and on websites. There was credit and debt long before modern banking, there was debt before credit cards, and there were credit cards and mortgage loans before there were credit rating agencies. If someone can't get out of debt that is an earning/budgeting/spending issue and they should definitely stay away from credit.

[@NathanDuong2023]

Makes sense - Thank you,

[@Gio-vf1zf]

I paid my car loan 2 months before the end date because I wanted a high score when I was ready to buy a new car from my bank then the score dipped. I had to wait 8 months for it to go back up. Now if you open up a credit card it goes up 10 points. Weird!!!!

[@KandyceAurelia]

So basically… “this guy paid off his debt don’t trust him”

[@mustangecoboosthpp3869]

Yep that is it in a nut shell, FICO is a 100% scam it is designed to keep you in debt forever in order to have a high credit score. FICO needs to be done away with.

[@deborahanderson4211]

Hi, Adam, the same thing happened to me when my car loan was paid off and two consumer loans as well

[@ajinamoto8276]

i have 743 and it dropped to 703 after getting a car loan 😂

[@carlosvillanueva6421]

So basically if you decide against the piece of cake, you still gain the weight. Makes perfect sense 😒

[@ccrobinson545]

So you get punished when you pay the bills and punished when you dont!

[@ProudMoney]

kinda true to some extent

[@mustangecoboosthpp3869]

FICO is a scam, it is designed to keep you in debt in order to keep a high credit score.

[@BigMacOpossum]

Your face in the thumbnail of this video should be a new emoji! Great video!

[@fogrunr5075]

Yaah! 😆😆😆

[@DrCalvinTeach]

I've had this question for years and this is the first video that every explained it in a way that makes complete sense. I understand the risk with finally paying off a debt now. Thanks! Absolutely love this channel!

[@ProudMoney]

Thanks!

[@mustangecoboosthpp3869]

FICO is a scam, it is designed to keep you in debt.

[@teencred9430]

On a philosophical viewpoint, I can see the rationale with the fitness analogy. But I don't think it explains the technical reasons why FICO scores drop after paying off a loan. If we look at the 5 elements of the FICO Score model - credit utilization, credit payments, credit mix, new credit/credit inquiries, and length of credit history - TWO of these elements do get negatively affected. Paying off a loan means erasing one credit account from one's record, docking points against credit mix. The bigger hit is the one against credit history. A car loan contains YEARS worth of credit history. Taking that off the record erases a BIG chunk off the total credit age, dropping the average age of credit accounts down a lot, ESPECIALLY for young accounts.

[@BelleOmbreGrey]

Just payed off my car note two years early and I don't care if it deflates my 853 score. Because puting that money toward my building a fat cash reserve and maxing out my Roth and HSA are way way more valuable

[@anonymous6594]

My credit score went up 30 points when I added an installment loan early this year.

[@lienecarter6411]

The first time i took out a secured loan my score went up 100 points! I was a few years out of bankruptcy and could not figure out how to get my score above 600 for the life of me. It’s very different than when you are you and establishing new credit. I didnt even know that secured loans would help your credit score. It was a lesson learned by accident.

[@anonymous6594]

@@lienecarter6411 I did a pledge loan with Navy Federal which is a secured loan. I paid off 95% of the loan with days. Monthly on time payments are being reported and my next payment isn’t due until 2026. 😂

[@lienecarter6411]

@@anonymous6594 I now have navy federal so when I need another secured loan that’s where I’ll go. Do they do a hard pull for it?

[@anonymous6594]

@@lienecarter6411 not for a secured loan (pledge).

[@fogrunr5075]

@@anonymous6594 Smart. A loan that builds credit that does not require a hard credit pull, and you quickly drop the credit utilization on it by paying off the majority of it. Smart.

[@Scripture_with_santos]

How does that make sense you basically do it for nothing. Your score drops when you get the loan. Then you get some points, finally pay it off and lose more points. Smh

[@turtletrade]

Paid off my home mortgage just over 10 years ago in October. When the trade line rolled off my credit report my TU score went down 12 pts, from 827 to 815. No other debt

[@Dustyphoto915]

F your credit score. Snap out of it.

[@Albert-777]

Now that’s the only thing that makes sense 👍🏼

[@josecolon8143]

Can you make a comparison video about US vs Europe credit standards functions? 🙏🏼🙏🏼🙏🏼🙏🏼

[@biblioholic7139]

I expect it's less about behaviors of people who pay off loans and more about how the credit utilization portion of the score is calculated. You just eliminated $15k+ from the denominator and maybe $500 from the numerator of the ratio, that's going to increase credit utilization %. If you increase the credit limit on your credit cards by about the same as the original principal of the paid loan without increasing spending your score would probably get closer to where it was with some variance for the effect on age of credit & credit mix categories.

[@JosephMbidi]

I paid off my vehicle loan. I just lost 8 points to my credit score.

[@williamfrederickiii1683]

I just paid off a car loan today. Waiting to see what happens. Also, a year ago I refinanced a car loan through Lightstream. They gave me a great rate. When I asked them about getting the title transferred to them, they said they did not want to deal with that so that they would just make the loan unsecured. This did not raise the rate, so I took them up on it. I assumed this was because I had high credit score and low debt/income but not sure.

[@mlj_the_shield]

I paid off my mortgage last year. Dropped 29 points the next day, from 840 to 811. How is that fair again?

[@zenster1097]

It's stupid. You're literally penalized for being responsible.

[@aaronlee4913]

Same thing it happened to me like that , my score dropped from 824 to 793

[@JG94523]

I paid off a mortgage and then my car loan and each event caused a drop in my score. I have no debt (I pay cc balances prior to next statement cut off date). The credit bureaus claim having a mortgage/car loan and credit cards is the best mix of credit but I fail to see the logic. Also, why shouldn’t we know as consumers what these FICO score formulas are? After all, interest is predicated on your score and directly impacts many Americans ability to save which leads to other financial and economic impacts. I understand the overall elements of the formula but I still think consumers have the right to know exactly how it’s computed.

[@mustangecoboosthpp3869]

FICO is a total scam it is designed to keep you in debt in order to have a high credit score.

[@clintonwoodward]

Were those Fico 8 scores? Curious to if the behavior is any different for Fico 9.

[@Bxr400]

No matter if it was #8 or #9….. banks and credit bureaus play the same game.

[@nickpaust6636]

This happened with my school loan after 14 years. So annoying!!!

[@howardfrank6050]

I had a similar experience several months ago, with 25 point drop post-loan payoff, then a 12 point rebound after two months. The scoring gods want to see consistent payment, even small balances.

[@monib4458]

This is what I don’t want to happen but I’m over paying this note every month. Ready to pay in full but I want to keep my score where it is. Torn 🥴😩

[@grumpygrump2639]

@@monib4458 Are you planning to get a mortgage, car loan or other loan in the next 6 months? If you don't then I wouldn't sweat it if you have other lines of credit, like a credit card or better yet 2, that you use regularly and pay off on time (preferably paying in full each time). I payed off a car loan early, closed a credit card, opened a new credit card account and had high utilization on a card all in one month which dropped my score considerably (don't remember the exact figure). I had the cash to pay for the card purchase that caused the high utilization and just paid off the full balance when the bill came due, like I always do. All of this was just about 6 months before I applied for a mortgage. When they ran my credit for my mortgage application my score was right back where it had been before I did all of those things that temporarily dropped my score. It rebounds fast enough if you plan for it. Nothing to really worry about too much until you plan to take out a loan and then it is pretty easily managed IMO.

[@monib4458]

@@grumpygrump2639 thank you so much for responding and I’m happy to hear it bounced back. I plan on paying it off after I move. So sometime the end of this year. I’m ready to get it out of the way.

[@Carol-tq1fb]

I don't know they can get away with knocking down your credit score. I would be mad, it is not right, you work so hard to get good credit. Life is a bowl of cherries I guess. Thanks for your video sir.

[@grumpygrump2639]

I just don't get why people seem to get so bent of shape over temporary changes. It will fluctuate, I just don't worry about it or get upset.

[@FinanceNation]

Well congratulations...loan paid off! 🎊💞❤😜😁😃

[@ProudMoney]

Thanks!

[@robertgrudain8826]

That sucks there taking points off your credit score in essence punishing you for something you haven’t done because they feel that you might.

[@Domo3d]

Crazy right?

[@josephrrivera9686]

But if you pay off one loan and get approved for another lease with a new car, then why don't you get credit for the new loan??? It seems that they only want to negatively affect you on something they should in fact give you credit for. And you said, they hit with a drop of 20 to 30 points in an instant, but take several months for it to get back to where it was before making the transactions. I just don't get it.

[@mitchell.9632]

Does it factor into the average age of accounts too (as a closed account)?

[@ProudMoney]

FICO is a little vague on this. because installment loans are not treated the same as revolving credit. so it factors into the age of your credit file in general, but it is not averaged in with your revolving accounts when it comes to average age of accounts, at least that is my understanding.

[@SpencerJohnsonOfficial]

It definitely seems counterintuitive, but I guess it makes sense at the same time! This was a super thorough and concise explanation, so thanks for clearing that up for us! This was something I'd been curious about for a while.

[@mustangecoboosthpp3869]

FICO is a scam it is designed to keep you in debt.

[@Clevey605]

Our mortgage lender had us refinance our vehicle so he could get us pre-approved for a mortgage. Now my credit just dropped below 620, and I already made an offer, accepted their counter offer, put down earnest money, and have an inspection scheduled for next week. Is doing what our mortgage lender told us to do going to screw us in the end?

[@ndayembidi6781]

I finished my vehicle loan yesterday. How long will it take my credit score to update? Please reply

[@ndayembidi6781]

@@consid3rate thanks

[@olliejj3]

So would it hurt my score if I paid off half of my car loan? I plan on buying a house soon and I don’t want my score to drop.

[@scottivlow9962]

Hi Adam, there is another thing why your credit score drops. If there is no more credit history for that loan to show up on a credit report the score should drop. It's like closing a credit card or having a zero balance on and or all them. When you close a credited account there is nothing to report on. Credit Bureaus work on a formula that takes in all the credit information from credit lenders and without that there is nothing to make a score on. So on that note, with no further credit input the question isn't, "why my credit score dropped by paying off a loan?" The better question is why do they have to drop your score at all with a paid off loan because the credit history from that loan is still there? However if a credit score has to drop, the next question is why does the credit bureaus have to drop thier scores more than 10 points by each bureau? Why can't make the scores drop from a minimum of 4 points and no more 10 points being the industry standard? They should treat a paid off loan as the same points lost as a hard pull. Or again not lower the scores at all but this should only do this if there are 4 or more active accounts on the credit report. "There is that thin file thing again that can hurt your next credit application approval." Having 4 or more accounts is way better in the long run. Having now wanting a travel credit card for protections, I learned the hard way getting credit cards isn't as easy like it was in the 70's-90's. Hence Citi and TD Bank credit card disapprovals last month. Adam this video makes the case for a better consumer protection law so that all lendees that pay off any type of loan, that the credit bureau can't punish your credit score by over 10 points. However because the big 3 credit bureaus have the big buck to pay a bunch of lobbyist any such proposed consumer protection rule making that goes against the interest of credit bureaus credit score formulas, they will fight tooth and nail to maintain the status que to these mathematical formulas. I know this long comment but there is a lot be said on this in how it could be a better credit scoring system but it isn't.

[@mustangecoboosthpp3869]

You just proved that FICO is a scam, paying off a Lon that you paid on time or early without any missed or late payments should not penalize you it should reward you.

[@HousesByVic]

So would paying down a large car loan instead of paying it off hurt the score as well? Maybe paying a 30k loan down to 5k?

[@charlesanderson8335]

student loans paid off credit score dropped 100 points, makes no sense

[@NCKyle1980]

So. Crazy question time because you are way more knowledgeable than me, dear sir. So where Vantage only takes open accounts into their scoring model. Theoretically that implies if someone has an account they have some sort of negative aspects like late payment or whatever and they close that account; those negative aspects won't show up on Vantage score. Obviously yes still on FICO but yea. Is this an accurate theory? At least for their scoring model. I understand it's still part of credit report.

[@oreally8605]

Vantage is garbage. Almost no retailers look at Vantage just FICO Experian and the rest.

[@NCKyle1980]

@@oreally8605 fun fact. No retailer looks at anything. They don't do the underwriting. 😌

[@RobertLW]

My credit score of 759 went to 718 after paying off a $3 balance on my credit card. Why?

[@ThuDinh-pc5fj]

Yep! After paid off the car I lost 18 points on my credit report!

[@stephencsoma564]

I had a perfect storm that dropped it 80 points. Got a mortgage, paid off my car, and got a CC. Went from 830 in March down to a 750 in April. I'm not sitting at a cool 790. But yeah dude that's insane how much it drops.

[@Xtremeproducts]

Mine dropped 65 points. Had to pay it off to get my home.

[@teencred9430]

How many other CCs do you have btw? I think having more accounts helps prevent you from getting hit badly again from paying off a car loan.

[@Xtremeproducts]

@@teencred9430 more cc helps. I have 35+ cc (business and personal)

[@grumpygrump2639]

@@Xtremeproducts ummmm, maybe. I used 2 credit cards only to get my score into the 800's way back when. It just takes time which I had plenty of. Now I have more lines of credit.... 3 total and still in the 800's.

[@Xtremeproducts]

@@grumpygrump2639 I’m close to $300k in Credit

[@TamzTable]

Total BS

[@bobdobbs7828]

I was so annoyed when this happened, they should reward you for paying it off not punish you. Lousy algorithm!

[@grumpygrump2639]

Is it them punishing you or the millions of people who pay off a loan and then go on a spending spree in the months following?

[@theblerdshow]

My mortgage company sold my loan to another bank. Dropped my scores 22-23 points across the board. 😕

[@scottwhite2583]

I paid off my house and I dropped 60 points and so far after 3 months I’ve climbed back 10 points no late payments

[@fogrunr5075]

Something I have done with success is drop the credit limit on one or two cards by $1000 to $2000 dollars to show responsibility by neutralizing my risk while getting a new card. And it works. Within a month my score is 10 - 16 points higher than it was, even though I got a new card.

[@mustangecoboosthpp3869]

FICO got you, now you have more credit and they know the majority of people will use that credit, FICO is designed to keep you in debt, the truth is FICO is a total scam.

[@deloriswalker2899]

So, is there a way to avoid this drastic drop. Should I open up more lines of credit prior to paying off a loan. Not any major loans but just credit cards.

[@user-sw7cq4zy2p]

That's what they want you to do but don't do. It

[@user-xk5oy8yk5p]

I just got a credit builder loan as a line of “credit” about a month ago It’s dropped my score 60 points. Just paid my car off today and now I’m realizing it’s about to drop further🤦‍♂️

[@user-sw7cq4zy2p]

@@user-xk5oy8yk5p I paid my car off my credit went down this credit thing is a bunch of Bullshit

[@jeruss00]

So this is why banks ask, "What race/ ethnicities" you are? " Bank: "Traditionally speaking people of your skin tone and that live in that zip code blah blah blah. Thats why your rates are higher and you'll lose more points."

[@SledgeIncTeam]

I always thought this practice was 🗑️

[@rickybobby9885]

Is your credit score the most affected when the balance hits 0? Lets say you have $100k on a loan for example. If you were to pay $99k in one lump sum and leave $1k left, would your credit score drop or would it stay roughly the same until it hits 0?

[@kellyaustin7487]

Well that sucks. Maybe I'll start to nickel and dime my last few grand.

[@BronxBombers_726]

My Citibank 2% card was cancelled. I asked why and they said it wasn’t paid. Really? Yet no one from Citi talked to me. I got a letter in the mail. Why? Oh I just bought something for $1500.00. What timing Citibank. They are the worst.

[@anandr1385]

I mean weren’t they sending you bills?

[@BronxBombers_726]

@@anandr1385 Nope. I’ve never been late in over 10 years. I’d there was an issue why didn’t someone contact me? Instead they shut my account down via a letter

[@c4mw]

If I were to pay a 3 year loan off in a year would it have the same effect or would the year be long enough to where my credit won’t dip?

[@mustangecoboosthpp3869]

It does not matter if you pay the loan off at the full term or pay it off early once it is paid off you will be punished by FICO by then dropping your credit score. Our credit score dropped when we paid off out home, paid off both of our cars, you get punished for not remaining in debt so they can keep making money off of you in interest.

[@sherrymckay7]

I think it's a bunch of crap, payed house and truck off and mine dropped, I don't want credit cards and end up in debt they can kiss my butt

[@mustangecoboosthpp3869]

Exactly, FICO is a scam, it is designed to keep you in debt in order to have a high score.

[@rickc.3552]

This is why I’m afraid to pay off my school loans. I have the money to pay them off, but I know the average age of my credit accounts will plummet. Right now my average age is 17 years.

[@grumpygrump2639]

Please, don't be afraid and pay off those loans. Length of history is only 15% of your score. Pay off the loans and use credit card for normal purchases. With good payment history your score will rebound quick enough.

[@rickc.3552]

@grumpy grump. Thanks Bud. I appreciate the response.

[@rachelwilliams7752]

My score drop 29 points aft car loan paid off 😢

[@Joshualibbyy]

Damn Adam u look PISSED! I don't want no smoke ok plz 🤣

[@sandorvarga7437]

Activasion.

[@therelentlesslyempowered]

What fico should do is leave the paid off account on your report for 10 years like they do for revolving accounts regardless of whether it’s in good standing. At the very least, it would show future creditors that you have experience with paying large installment amounts over time and it would have a positive impact on your score. I guess that would make too much sense huh? Or lean too much in favor of the consumer? Asking for a friend ❣️

[@michellenicole9110]

I thought it may be because its a closed account. It was active and now inactive.. perhaps 😅

[@mustangecoboosthpp3869]

Of course it is a closed account you paid it off and for doing that you were punished for being a responsible citizen who paid their debts on time and paid the debt you took out. FICO is a total scam, it is designed to keep you in debt to have a high credit score.

[@be_obee9024]

Question: when paying off a car loan or school loan, why does a credit score drop but when paying off a credit card, scores don't drop?

[@JJ-gr7th]

When you pay off a 10k auto loan the account is closed, it can’t ever be used again. But when you pay off a 10k credit card it can still be used in the future since it’s still an open active account

[@mustangecoboosthpp3869]

@@JJ-gr7th It is BS, you paid off a debt as agreed and you are punished, and you just proved that FICO is a scam because it is designed to keep you in debt.

[@AbrahamMilan-kj6yo]

Just take out another car loan 😂😂😂

[@Domo3d]

Basically

[@jadenbrijalba1823]

BEFORE paying off the car

[@daltonfury911]

So FICO say we’re all guilty until proven innocent. Got it!

[@9ml22]

I lost 69 pts🤬🤬🤬🤬

[@MrKidTy]

Dang. That’s a lot. 😮

[@stevenmiller7747]

My 3 major bureaus are all in the mid 700s, 2 months ago sold a car and paid off the remaining $5000 on the loan. My scores didn’t drop a bit. There has to be more involved in this.

[@ProudMoney]

It might actually be because your balance on the car loan never got that low in comparison to the original loan amount. Usually people are paying in installments, not dropping a big lump sum at the end, so that is sort of a different scenario.

[@stevenmiller7747]

@@ProudMoney very possible!

[@Bxr400]

In other words, it’s just a BIG scam!!! 🤫

[@myfavorites1016]

My credit score drops as soon as i get out of bed 😂 , we will never be able to do things perfectly for credit

[@monib4458]

😂😂😅

[@myfavorites1016]

@@monib4458 you like 😂 ?

[@jacobusdegroot7557]

My score dropped 20 points when I paid off a car loan.

[@johnsp1221]

I guess who is and most importantly, controls your credit score? Private or government? 🤔 And now FICO has jumped in and is now offering a free score from Equifax once a month! So many questions??

[@ammooth1592]

This is why I haven't paid my student loan 📴. I thought about it time and time again about getting it out of the way because I can. But when it doesn't report on your credit anymore. The situation you are experiencing will be the same. Then that would effect my open accounts‼️ Lord, 🙏 knows I need more open accounts, in my name ✅

[@monib4458]

Exactly, my student loan accounts are my oldest ones too. Trying my best to not give in and pay them off.

[@grumpygrump2639]

Open a couple of credit cards and use them monthly for purchases you would make regularly, don't buy things just to get the credit history. Pay off those student loans unless you are planning on taking out a loan in the next few months? Your score will rebound quickly enough if you have other open lines of credit.

[@MrStrutus]

Who cares about score when you paid your bill

[@grumpygrump2639]

Right, the only time I worry about is when I am going to apply for a loan. So I plan ahead for that on the very occasions that occurs.

[@canyonoverlook9937]

Credit scores are a joke. I was at 838 then I paid off some loans and am at 821 to 827 now 1.5 years later.

[@grumpygrump2639]

which is more than enough of a score, with a good amount of buffer, to qualify for the lowest loan rates available. To me that's no joke but YMMV.

[@aaronlee4913]

Chase closed my 2 Chase credit cards without notifying me and I had zero balance on both accounts. Both credit limit were like $20k each

[@johnsantos5251]

Bro wtf, what you doing now?

[@grumpygrump2639]

Were you actively using them?

[@chrisw.5823]

Yeah, they are known for that or reducing your credit limit because you don't use your card

[@mace422004]

Just get a personal loan with Discover with no prepaid penalties for about 10k. Pay 9k off the loan after it post for 60 days. Interest occurs based on daily balance, same as car loan. Now you have 90 percent of the loan payed off, so you score looks good and you are ahead on your payments. Just send 20 a month now and stretch out the loan and give them a few crumbs of interest on a 1000 balance, for the 4 or 5 years. When you finally pay it off, do it again.

[@grumpygrump2639]

Ugh, not thanks. I got my score into the 800's simply by using credit cards for normal purchases, I didn't buy things just to raise my score, and have always paid the balances in full every month. Why pay interest when you don't have to?

[@mace422004]

@@grumpygrump2639 you only need the installment loan if you don't have a mortgage yet or if your average history of accounts is below 8 years. I don't pay any interest on anything now, but I had to play the game to get a mortgage twenty years ago, now I'm an old fart with a long history.

[@mustangecoboosthpp3869]

You just proved that FICO is a scam to keep you in debt.

[@zaidalnaib]

It happened to me

[@danhealey5417]

Toyota hit my score 80 points when i paid off my car in 6 months

[@mustangecoboosthpp3869]

I paid off my new Toyota a 2023 Tacoma in 6 months it was a 72 month loan, I did not care how long the loan was because I knew it was going to be paid off in 6 months, also paid off my wife's Mustang in 25 months it had a 48 month loan on it, both cars paid off and we get punished for being good citizens paying our debts back early. FICO is a scam that is designed to keep you in debt to have a high credit score.

[@phillipdeck933]

Score goes down because the payoff account is closed and there is no active payment history to that creditor. Score was higher before because it was showing your current payment status.

[@incognito6050]

This is the best explanation. Typically car loam accounts are 6 yrs old so closing a 6yr account is a factor too

[@incognito6050]

*loan

[@mustangecoboosthpp3869]

In other words you just proved that FICO is a scam and is designed to keep people in debt in order to have a high credit score.

[@jimmyobando938]

I don't entirely agree with your comments

[@anthonyrose6686]

Yes never payoff anything FICO doesn’t like that they want you to have something reporting, sad to say never payoff anything leave small balance. Vantage scoring like you to payoff balances

[@monib4458]

😢

[@grumpygrump2639]

It's temporary. I don't sweat paying things off on time or in the case of a few car loans early. Yes, they want to see see activity but that doesn't mean you have to leave a small balance. Just buy things you normally would anyways, like groceries and/or gas, put them on a couple of credit cards then pay in full when due. Easy to get an excellent score that way, it just takes time.

[@eduardazayev4230]

Your available credit went down, so the credit score goes down. It is the same as closing a credit card.

[@MrPipsqueak-oq9kw]

That makes perfect sense!!! Edit: Still a bummer though…

[@themercedestraveler9566]

I don't think auto loans are categorized as available credit. And they are computed into available credit on fico

[@KittyOzzyZiggy3895]

Credit cards make you poor...lol

[@grumpygrump2639]

Maybe you, certainly a few people I know but I know it's their own fault not the credit cards.

[@googley-kf8nx]

Want to feel better, either save up the money to pay in cash ORRRR ..... use telepathy to transport yourself to live in another dimension once with no credit scores...😢😮😅

[@DoorDashers791]

I closed all 4 of my American express cards I had issues the past 6 years. I emailed the CEO of American express he called me a week later. He told me American express spies on its consumers.