Hegemony's score tanks!!!! removal of last installment line

[hegemony]

Seems it has been 10 years since paying off our mortgage. An older me would have been appalled. Still seems weird that having a mortgage obligation makes someone a better relative risk. 

 

[trachkids]

Ugh. I am not looking forward to that day.

 

So few things in this world make any sense any longer. 

[MP80]

Fair Isaac Corporation’s FICO credit-scoring algorithm is biased toward creditors and lenders. If consumers wish to avoid incurring a punitive score reduction of more than 30 points, they must hold some form of installment loan to gain "immunity effectively."

 

You said: "How is it that carrying mortgage debt actually makes one a relatively lower-risk borrower?"

 

GEORGE once says: What's my driving got to do with my credit? 

Edited April 6 by MP80

[Flyingifr]

23 hours ago, hegemony said:

Seems it has been 10 years since paying off our mortgage. An older me would have been appalled. Still seems weird that having a mortgage obligation makes someone a better relative risk. 

 

Count your blessings. When I paid off my mortgage I lost 60 points. The following month I paid off  my car loan and lost another 40. In the span of 60 days I lost 100 points and gained $3,000 a month in disposable income to not make payments with. Since I would no longer be paying my mortgage or car loan, FICO branded me a terrible risk. I had to go out and get $50,000 in credit card lines to start getting any of those points back.

Edited April 6 by Flyingifr
Clarify my disposable income increase

[chicagorich]

Didn't somebody on here try to get around this by paying down their mortgage and then having the smallish balance recast to a small monthly payment to keep the account active?

[hegemony]

12 hours ago, chicagorich said:

Didn't somebody on here try to get around this by paying down their mortgage and then having the smallish balance recast to a small monthly payment to keep the account active?

I vaguely recall this. was it @cv91915?

[Flyingifr]

12 hours ago, chicagorich said:

Didn't somebody on here try to get around this by paying down their mortgage and then having the smallish balance recast to a small monthly payment to keep the account active?

The TL wouldn't make much sense. $1 a month for 30 years? Only a computer would count that as creditworthiness.

[cv91915]

1 hour ago, hegemony said:

I vaguely recall this. was it @cv91915?

 

 

 

My payment was initially $2.80.  

An ARM is a ticking time bomb. 

[laynlow]

8 hours ago, cv91915 said:

 

 

 

My payment was initially $2.80.  

An ARM is a ticking time bomb. 

About $3 per month in interest.  Who can put a price on good credit?

[hdporter]

13 hours ago, hegemony said:

I vaguely recall this. was it @cv91915?

 

I more than "vaguely" recall this.  I was prepared for him to tattoo this fact on his forehead  .

[hdporter]

On 4/5/2026 at 1:22 PM, hegemony said:

Seems it has been 10 years since paying off our mortgage. An older me would have been appalled. Still seems weird that having a mortgage obligation makes someone a better relative risk. 

 

Having a mortgage doesn't make you a better risk.  However, as a whole, present/past mortgage holders manage their credit better than those without a mortgage and you're no longer riding their coattails  .

 

Of course, your actual risk profile hasn't changed at all.  Credit scoring, however, can only evaluate based on what's present in your report.

[StarkRaven$]

On 4/7/2026 at 8:09 AM, cv91915 said:

 

 

 

My payment was initially $2.80.  

An ARM is a ticking time bomb. 

Ingenious!

[Krish]

I was excessively obsessed with perfect score and had paid off several accounts before the statement is realased.

 

That was old.

 

New me - dont care for credit score anymore, only care to maximize my finances while not paying high interest or no interest at all. Only worry when the score dips below 800.

[cashnocredit]

On 4/11/2026 at 8:49 PM, Krish said:

I was excessively obsessed with perfect score and had paid off several accounts before the statement is realased.

 

That was old.

 

New me - dont care for credit score anymore, only care to maximize my finances while not paying high interest or no interest at all. Only worry when the score dips below 800.

 

Me too! I also noticed a drop that averaged about 15 when a paid off mortgage I'd co-signed long ago fell off. I only have CCs. While I never carry a balance, I have fairly high balances reporting, averaging about 10% of my total lines. Might have been a bigger drop If I bothered to maximize FICO but I have only done this a few times over 2 decades to see the effect. FICO's average just over 800 but bounce around a lot from large balance changes. I've never had any adverse action other than cards that didn't renew when I stopped using them thinking debit cards were simpler with no monthly bill. That was really dumb of me but at the time I had no idea how credit worked. Like trying to rent a car with a debit card (hard). Then I had to start from scratch with no credit history.

[shifter]

Woah, what the...? Just popped in for a quick visit and all these people I haven't seen post in years are back in action.

 

Is it 2017 again?

[Flyingifr]

On 4/5/2026 at 1:22 PM, hegemony said:

Seems it has been 10 years since paying off our mortgage. An older me would have been appalled. Still seems weird that having a mortgage obligation makes someone a better relative risk. 

 

I have been posting about this for years. When I paid off my mortgage in 2015 I lot 60 points. When I paid off my car loan a month later I lost 40 more. Credit Scores are based on the question of "how likely  is this person to make or skip the next month;s payment?" Have the loan and if it is up to date, the answer is "very". Make the last payment on that loan so that it no longer exists and the answer is "very unlikely". You can pay every mortgage payment on time for 30 years and FICO will reward you. Make that last payment and FICO will punish you immediately.  It took me over a year to get those 100 points back.

 

In April I had solar panels put on my home. I also had my 120 year old house insulated. I took the 1 year no interest option on both. They represented my only debt, $29,000 between them. Both got reported to the credit bureaus as new loans with that balance. BANG!!!! 120 point hit on my credit score. I paid both of them off in two weeks. Any bets on how long it will take me to get those 120 points back? My only debt is now AZEO of less than $100 with $85,000 in lines, no loans, no other debt.

 

Credit Scores are quick to punish and slow as molasses flowing up-hill in February to reward. 

[get.randy]

Why would you take the 0% deal for 1 year only to turn around and pay them off after 2 weeks? Those new accts hurt your AAoA. If you do take the deal, your credit takes a short term hit, you should at least ride out the year of free money. Or pay them down, but not all the way to zero...

[Flyingifr]

It was my plan to pay cash but I was offered a nice discount if I took their financing. When I lost the points I said "screw it" and went back to my original plan, minus the big discount.

[A Credit Ed]

My mortgage was sold to another mortgage company last year.  Due to weird timing, the original mortgage reported as paid off and my FICO took a 40'ish point hit.  It came back when the new company reported my "new" mortgage.