Mummichog

Credit Score and Paying off Loans

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So, I put $50,000 into my mortgage and my credit score went down by 39 points.    My debt to income ratio decreased, the equity in my home increased, yet I lose almost 40 points on my credit score.  I find this peculiar.  Although the mortgage company said it could happen.  Shows I can handle less debt, I guess?  

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I’m trying to re-fi the remainder of my mortgage into a fixed, low rate.  So I want a good score too.   How long do you think it takes to get those 39 points back?

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Lowered me from good to fair.   I was climbing out of a hole.  Ended up going from excellent to as bad as it gets and back up to good.  Then this.  

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2 mins ago, Mummichog said:

Lowered me from good to fair.   I was climbing out of a hole.  Ended up going from excellent to as bad as it gets and back up to good.  Then this.  

We've all been there,  stick with it :th:

Mines pretty good rite now, I'm fixing to pay of a credit card, well see which way that goes lol

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Posted (edited) · Report post

You feckers have to be taught everything....quite a black eye...as far as how  you pricks were bought up.

I have FOUR credit cards and I pay the bills on every single one  within a few days after they came in..ZERO interest....credit score....875.

My debt is ZERO.....ZERO 

 

Edited by CATCHnRELEASE

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Posted (edited) · Report post

How bad does that 39 points make it, they average 3 scores, last time I checked I was around 760 but one company had me around 810 

 

unless you talking 400 not sure how much 38 points will hinder you 

 

also note you take a hit when your your score is checked (3x) I believe 

Edited by Sandflee

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It’s a free thing with my credit card.  They update your

score every couple of weeks and you can check it on your phone.  Not supposed to touch your credit score.  I think it’s only one. 

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Posted (edited) · Report post

8 hours ago, Mummichog said:

Lowered me from good to fair.   I was climbing out of a hole.  Ended up going from excellent to as bad as it gets and back up to good.  Then this.  

 

9 hours ago, Mummichog said:

So, I put $50,000 into my mortgage and my credit score went down by 39 points.    My debt to income ratio decreased, the equity in my home increased, yet I lose almost 40 points on my credit score.  I find this peculiar.  Although the mortgage company said it could happen.  Shows I can handle less debt, I guess?  

What kind of mortgage?  Fixed rate term or line of credit?

 

No other pay downs, closures, etc. On your report?

 

What was your score prior to the pay down?

Edited by JaseB

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I have the Barclays JetBlue card and they provide unlimited access to my score. 

 

We recently knocked off some accumulated credit card charges and my score jumped nearly 80 points, low 700s to high 700s. Just not sure how long the lag was.  Still below the 800+ before we got the new house's mortgage but that’s to be expected. 

 

Having your score drop when you paid off the debt may not be so strange however. I believe the ratings are trying to gauge your ability to service debt, less than your total debt outstanding.

 

Thus, they do not treat credit card and other short-term loans (i.e. cars, boats) as they do mortgages. The scores are trying to assess your ability to pay, to service your debts, as a sign to future creditors of your current debt load potential. This places greater emphasis on the variable component of your debt service load.

 

Given the nature of credit cards (charge-repay-charge again), the ratings see the total credit card load and ability to pay as more relevant than servicing a fixed-payment mortgage. This is my thinking, I do not know this to be absolutely true. 

 

But if the above is correct, the total amount of your mortgage outstanding is not as relevant as long as the cash flow requirements, the monthly payments, do not change. So absent a refi, making a bulk excess payment to reduce your mortgage principal, does not change your month-to-month mortgage payment. 

 

As mentioned, a couple of cycles should tell you the ultimate impact. Good luck.

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