cancel
Showing results for 
Search instead for 
Did you mean: 
Bigdaddy1560
New Member

Score decrease

So I just paid off $47,000 mortgage and my score went down. Why? 

1 Best answer

Accepted Solutions
bluedeb
Level 15

Score decrease

Paying off a loan can be a big relief—but if you monitor your credit scores, you might be surprised to find your scores don't improve. In some cases, they may even drop a little. It can be counter intuitive, as successfully paying off a loan and having fewer bills is good for your personal finances.  Most likely the impact will be temporary.  

 

Here are a few reasons why your score might drop when you pay off a loan:

  • It was your only installment account: Having a mix of revolving accounts (like credit cards) and installment accounts (such as loans) is generally good for your credit scores. If the loan you paid off was your only installment account, you might lose some points because you no longer have a mix of different types of open accounts.
  • It was your only account with a low balance: The balances on your open accounts can also impact your credit scores. If the loan you paid off was the only account with a low balance, and now all your active accounts have a high balance compared with the account's credit limit or original loan amount, that might also lead to a score drop.
  • Your scores dropped for a different reason: Many factors impact your credit scores, and the drop might be a complete coincidence. For example, if you recently applied for a loan or credit card (even if you didn't get approved) or your credit card balance increased (even if you paid your bill in full), that could lead to a temporary score drop.

In general, paying off a loan won't have much of an impact one way or the other, and if your score does drop, the change will likely be temporary. But the presence of the account on your credit reports can continue to impact your scores for years to come.

View solution in original post

3 Replies
bluedeb
Level 15

Score decrease

Paying off a loan can be a big relief—but if you monitor your credit scores, you might be surprised to find your scores don't improve. In some cases, they may even drop a little. It can be counter intuitive, as successfully paying off a loan and having fewer bills is good for your personal finances.  Most likely the impact will be temporary.  

 

Here are a few reasons why your score might drop when you pay off a loan:

  • It was your only installment account: Having a mix of revolving accounts (like credit cards) and installment accounts (such as loans) is generally good for your credit scores. If the loan you paid off was your only installment account, you might lose some points because you no longer have a mix of different types of open accounts.
  • It was your only account with a low balance: The balances on your open accounts can also impact your credit scores. If the loan you paid off was the only account with a low balance, and now all your active accounts have a high balance compared with the account's credit limit or original loan amount, that might also lead to a score drop.
  • Your scores dropped for a different reason: Many factors impact your credit scores, and the drop might be a complete coincidence. For example, if you recently applied for a loan or credit card (even if you didn't get approved) or your credit card balance increased (even if you paid your bill in full), that could lead to a temporary score drop.

In general, paying off a loan won't have much of an impact one way or the other, and if your score does drop, the change will likely be temporary. But the presence of the account on your credit reports can continue to impact your scores for years to come.

View solution in original post

Garfield999
Level 1

Score decrease

Because you paid it off.

 

Sounds weird but true. If you owe money and are keeping up with payments.....you are a darn good risk. If you have no debt.....you might not be that great because you aren't paying any debt.

 

Heck, I have watched my score fluctuate by as much as 40 points just from normal monthly credit card activity.

I used my card for business expenses. Score skyrocketed. Paid it off, dropped below my average.

Garfield999
Level 1

Score decrease

Ya know, the more I think about worrying about a credit score, especially when you know your own is good.

 

Go out and buy a bottle of whiskey. Celebrate the fact you paid off that **bleep** mortgage.

 

Get snockered, drunk, make noise....Be Happy!

 

Screw the bean counters and their snot head numbers.

 

Dammit.....Congratulations for paying it off.

Privacy Settings
v