09-15-2020, 10:33 PM
which lowers your score again... It is almost like a plan...
I recently paid off a mortgage, so have no large loans with my bank (no car loan either.). My FICO score dropped 30 points* because when you pay off a long term loan without fail for decades it doesn’t prove to credit agencies that you’re a reliable and safe credit risk, it says to them 1) “nobody has given this guy a big loan for some reason, and 2) we have one less method to gauge if he has a rapid, detrimental change in his financial situation. BOOM. Take off 30 points. That will solve the problem on our end.”
* Nothing else changed in my finances that would affect a credit score. In fact the only change in my finances is that I now have more money, because there’s no mortgage to pay.
I recently paid off a mortgage, so have no large loans with my bank (no car loan either.). My FICO score dropped 30 points* because when you pay off a long term loan without fail for decades it doesn’t prove to credit agencies that you’re a reliable and safe credit risk, it says to them 1) “nobody has given this guy a big loan for some reason, and 2) we have one less method to gauge if he has a rapid, detrimental change in his financial situation. BOOM. Take off 30 points. That will solve the problem on our end.”
* Nothing else changed in my finances that would affect a credit score. In fact the only change in my finances is that I now have more money, because there’s no mortgage to pay.