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paperchase10

Score took a hit! SMH

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I had a car loan for 2 years never late decided to trade it last month. When the new loan hit I lost like 5 points no biggie.

But when the old load updated to paid it tanked my experian score 34 points smh. Will this correct itself or just the nature of the beast?

I used the same bank FYI.

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it would be helpful to know score source and before/after scores.  But if your scores are still in the 700's, I wouldn't sweat it much ... and much/most of the dip is likely to reverse itself within 6 mo.

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18 minutes ago, hdporter said:

it would be helpful to know score source and before/after scores.  But if your scores are still in the 700's, I wouldn't sweat it much ... and much/most of the dip is likely to reverse itself within 6 mo.

Fico 8 my first alert was from experian. It dropped me to low 600's smh. Cool I figured once the new loan gets some traction it would reverse itself. Thanks for the feedback!

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The exact think happened to me when I bought my car last April. Navy Federal loan was paid off, new loan with another CU hit the report and I took a 30-50 point hit across the board. It took almost a full year to bounce back. 

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About 3.5 years ago, I had one car loan reporting that was paid and two others that were paid years before and my score dropped 18 points after the last payment was reported. At that point, I had no active car loans or leases reporting.   It took about 6 months to regain those 18 points.  Interestingly enough...A few years later I had 2 active car leases and cosigned for a friend on their auto lease.  When the 3rd car reported, there was no drop in score even though a new inquiry reported and the 3rd lease reported.  When one of my 2 car leases was reported paid, there was also no drop in score.  I replaced that lease this month with a new car lease and again, no drop in score even with an inquiry and the new lease reporting.  I think the fact that having at least one active car loan or lease going at any one time will keep your score intact but having no loan or lease reporting will drop your score temporarily.  I'm sure the fact that my revolving credit card balances were less than 1% of my available credit also helped. I also believe If you have very few revolving accounts or low credit lines on those revolving accounts, the installment loans will have a bigger impact on your score than if you have many revolving accounts with larger credit lines.

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On 4/10/2019 at 4:09 PM, paperchase10 said:

I had a car loan for 2 years never late decided to trade it last month. When the new loan hit I lost like 5 points no biggie.

But when the old load updated to paid it tanked my experian score 34 points smh. Will this correct itself or just the nature of the beast?

I used the same bank FYI.

You get a FICO08 and FICO09 boost for having an open, paid down installment - your 34 points is typical when it's paid down to <10%. But for FICO, closed installments are worthless (except for age). So you lose that benefit when it's paid off.

 

Your scores should bounce back quickly; look for a bump at 6 months, another at 12 months, then a gradual increase as you pay down the loan.

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Even with perfect credit (see early 2013 and later) the swings can be nauseating if you focus on every single score drop by itself.

 

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Correspondingly, it's equally irrational to celebrate a single change in the other direction.

 

Unless you have a perfect score on a given FICO model and stay there forever, every score increase will be followed by a score decrease for as long as you are alive.

 

Focus on the trend.

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