Credit Score / Report Gurus

musclefan21 said:

My score dumped 90 points (from excellent to good / fair level overnight.

I checked and I had missed a $200 payment for 30 days to a credit card which I rarely use and apparently had balance there that I didn’t remember. Also my credit card balance usage level went from like 1% to 18%.
Those two were the only changes. Is this a normal thing? What can I do about it?

I immediately paid that unpaid balance and even paid off that 18% utilization of my CC balance down to 0. I feel like there has to be something wrong.. I can’t wrap my mind around 90 points. I am not in collections of any kind. I don’t have balances on my credit cards or bills are past due. I am pretty good at being ontop of my finances (except this mishap)

what do you think about this and can this be corrected somehow ?

thank you

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Missed and late payments will always drop your score like a rock and quickly.

I paid a car off a few months ago and my scored plummeted 77 points. Since then it’s only come back up about 50.

So just get back to paying regularly and it’ll come back up over 6-7 months.

I’m trading in my C7Z for the GT500 and the remaining ($26k) will be put on my American Express...would that hurt my score?

rborden said:

I paid a car off a few months ago and my scored plummeted 77 points. Since then it’s only come back up about 50.

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Ouch. Noted, don't pay off my car before I go house shopping.

PIPO said:

I’m trading in my C7Z for the GT500 and the remaining ($26k) will be put on my American Express...would that hurt my score?

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Yes. Depending on your income and debt to income ratio, it could cause your score to drop drastically.

Kevins89notch said:

Ouch. Noted, don't pay off my car before I go house shopping.

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So this works two ways.

If you pay the car off, the score will drop...BUT on the other hand, it also lowers your debt to income ratio AND it gives you more buying power for a house and raises the loan approval amount.

So, if I were in your shoes, pay off the car, wait a few months and let that score rebound, then buy a house and do a 15 year Fixed Rate Mortgage. You can also lock in your rate with Rocket Mortgage through Quicken Loans for 90 days. If rates go up, you get the locked in rate. If they drop, you get the lower rate despite being locked in.

Without the car payment you can get a little more house AND you’re not stuck with a 30 year mortgage.

Additionally, you make one full extra payment a year to principal and you reduce your interest by $60,000 or more over the life of the loan and you own your home in less than 15 years. Quicker if you throw more at it every month.

I've been in finance for many years now, and do quite a bit of credit counseling with our customers. Its funny and sad the misconception of how credit works, and how your score is generated. Here's a couple quick pointers.

Credit card utilization under 30%. I say 30% for a few reasons. It means there are probably several cards in use, which means more potential points added per month, and 30% doesn't reach the point where lenders think you're living off your credit cards to survive IE: you have disposable income. Disposable income = good credit scores and a good chance you'll spend more at some point.

Income has 0 to do with your score. Income to debt will effect approval chances for new debt and that's about it.

Early payments don't help your score. They only save you money.

Just like your 401k plan and investments, your credit/debt should be diversified for the best results possible. If you have everything paid off, and no car or house payments, you're not generating score every month. Your score goes stagnant. So in the case of the OP, with most everything paid off, and then a bump occurs, there is no buffer of long payment history, to drown out the bump. Recently had some a couple with 740ish scores come through. Both had 6 or more lates on different accounts over the past 24 months, that were caught back up the next month. But had good CC utilization, 2 auto loans, house loan, and home equity and something for an atv loan. Because they are using their credit in many ways, their scores are still strong, and rates are good due to score. Without a diversified credit bureau, there is no diluting a late or missed payment.

I personally had to take over my dad's mortgage when he passed. Picked up a fair amount of debt by having to do that, and since my house has been paid off for 5+ years, my score shot up pretty quickly after doing it, even with more debt in my name.

Don't lose fact that your dealing with the banking industry. Your credit score isn't there for you to save money on a rate. Its a gauge for them to rate their potential income from you. The credit scores are their way of diversifying their portfolio. 800 up scores is like the money market. Your ROI (return on investment) will always be low, due to bottom of the barrel rates. 700's are your safe 401k markets. Going to grow and make money due to inflation, and a safe year over year bet. 600's are your aggressive 401k plans. You might lose some here and there, but the ROI is high. 500s are the slots down at the casino. Some days you'll get lucky and cash up big, other days it will cost you a ton to even show up.

Long story short, spend and borrow money, but do it as smart as you can.

rborden said:

So this works two ways.

If you pay the car off, the score will drop...BUT on the other hand, it also lowers your debt to income ratio AND it gives you more buying power for a house and raises the loan approval amount.

So, if I were in your shoes, pay off the car, wait a few months and let that score rebound, then buy a house and do a 15 year Fixed Rate Mortgage. You can also lock in your rate with Rocket Mortgage through Quicken Loans for 90 days. If rates go up, you get the locked in rate. If they drop, you get the lower rate despite being locked in.

Without the car payment you can get a little more house AND you’re not stuck with a 30 year mortgage.

Additionally, you make one full extra payment a year to principal and you reduce your interest by $60,000 or more over the life of the loan and you own your home in less than 15 years. Quicker if you throw more at it every month.

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I appreciate the detailed answer. I'm not preapproved because I'm both lazy, and very picky. I've put my foot down on a 3 car garage which is like 1/20 homes in the very specific area I want, plus I refuse any gated community, and I also don't want a pool in my backyard. Right now there's zero. There's 2 if I want a farther drive or a gated community....no! I haven't talked to anyone, but I don't think I'll have any problems buying what I want. Should be about 300K. I make 80k, only debt is about 7K on a car, 20% downpayment very easily, 815 credit score, and I'm already thinking/planning on the 15 year loan.

rborden said:

Missed and late payments will always drop your score like a rock and quickly.

I paid a car off a few months ago and my scored plummeted 77 points. Since then it’s only come back up about 50.

So just get back to paying regularly and it’ll come back up over 6-7 months.

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WTF? paying off a car loan will NOT drop your score....

Kevins89notch said:

I appreciate the detailed answer. I'm not preapproved because I'm both lazy, and very picky. I've put my foot down on a 3 car garage which is like 1/20 homes in the very specific area I want, plus I refuse any gated community, and I also don't want a pool in my backyard. Right now there's zero. There's 2 if I want a farther drive or a gated community....no! I haven't talked to anyone, but I don't think I'll have any problems buying what I want. Should be about 300K. I make 80k, only debt is about 7K on a car, 20% downpayment very easily, 815 credit score, and I'm already thinking/planning on the 15 year loan.

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it's easier to qualify for a 30yr mortgage but if you can swing the 15yr do it.

I have had this happen, called the credit card company and they took the late payment off of my report.

All my credit cards on auto pay now so I never get a late payment.

nxhappy said:

WTF? paying off a car loan will NOT drop your score....

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When you pay off a car loan, the account is now closed.

Closed accounts will negatively affect your credit score by lowering it. Mine nose-dived sharply then came back up over several months. I have no collections, no late payments, nothing in default or otherwise derogatory.


Your credit score may drop after you finally pay off debt, but it's only temporary


Paying Off an Auto Loan Is Bad For Your Credit Score!? - Money Under 30

Kevins89notch said:

I appreciate the detailed answer. I'm not preapproved because I'm both lazy, and very picky. I've put my foot down on a 3 car garage which is like 1/20 homes in the very specific area I want, plus I refuse any gated community, and I also don't want a pool in my backyard. Right now there's zero. There's 2 if I want a farther drive or a gated community....no! I haven't talked to anyone, but I don't think I'll have any problems buying what I want. Should be about 300K. I make 80k, only debt is about 7K on a car, 20% downpayment very easily, 815 credit score, and I'm already thinking/planning on the 15 year loan.

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You’re in good hands on that.

Well, no idea what happened but score went down from 786 to 697, which made me go WTF, and I posted this thread, but I just checked my score again today and it bumped upto 754. What in the hell is going on here?

rborden said:

Yes. Depending on your income and debt to income ratio, it could cause your score to drop drastically.



So this works two ways.

If you pay the car off, the score will drop...BUT on the other hand, it also lowers your debt to income ratio AND it gives you more buying power for a house and raises the loan approval amount.

So, if I were in your shoes, pay off the car, wait a few months and let that score rebound, then buy a house and do a 15 year Fixed Rate Mortgage. You can also lock in your rate with Rocket Mortgage through Quicken Loans for 90 days. If rates go up, you get the locked in rate. If they drop, you get the lower rate despite being locked in.

Without the car payment you can get a little more house AND you’re not stuck with a 30 year mortgage.

Additionally, you make one full extra payment a year to principal and you reduce your interest by $60,000 or more over the life of the loan and you own your home in less than 15 years. Quicker if you throw more at it every month.

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Yep it's the same with credit cards, I had a kohl's cc that I forgot about and never used. They actually closed the account on me for non activity and it lowered my credit score almost 30 points.
It's strange how you can get rid of debt and your scores lower but your buying power increases.

nxhappy said:

WTF? paying off a car loan will NOT drop your score....

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when I paid off my truck my score dropped around 30 points, it was back up in around 3 months. My score is usually in the 810 range give or take. The little "why" explanation they give even said due to lack of installment loans

DSG2003Mach1 said:

when I paid off my truck my score dropped around 30 points, it was back up in around 3 months. My score is usually in the 810 range give or take. The little "why" explanation they give even said due to lack of installment loans

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I've paid off multiple cars, score never dropped.

nxhappy said:

I've paid off multiple cars, score never dropped.

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My score dropped about 20 points when I payed off my cobra 2 years early. Went back up a month later.

Mpoitrast87 said:

My score dropped about 20 points when I payed off my cobra 2 years early. Went back up a month later.

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that's really weird, doesn't make any sense. I guess it does happen for what ever reason.

nxhappy said:

that's really weird, doesn't make any sense. I guess it does happen for what ever reason.

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did you have other loans at the same time? When I paid mine off I no longer had any loans (auto, mortgage etc...). It said the lack of installment loans was a factory

DSG2003Mach1 said:

did you have other loans at the same time? When I paid mine off I no longer had any loans (auto, mortgage etc...). It said the lack of installment loans was a factory

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probably bc of the mortgage