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rememberingox

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I paid off an auto loan early and my score dropped 64 points?

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Unfortunately, this is both sad and normal. There are a number of serious flaws in the credit scoring system and this is one of them. The scoring algorithms don't like paid-off loans or zero balances on credit cards.

The scoring system isn't designed to reward people who do the good, hard work of getting out of debt. It's designed to show lenders how potentially profitable we're likely to be as customers -- and that means the system is biased toward those who have debt but manage it well.

It's very unfortunate that good people who work hard to do the right thing are actually punished by this system. But it's the reality.

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The F in FICO is not what you think

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It's anything but Fair. It's was designed to be a tool to predict the "creditwortyness" of a potential financial customer. Now used by tools. Proven by the fact that those who need least get the best rates. And us Johnny Paychecks who always pay more get the privilege of being more profitable for the lenders and treated like they're doing us a favor to pay more. We are their best customers but they treat us like the opposite. :-p

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