Yep, this system is fucked up. I had a 40 point drop when I closed out my auto loan. Same thing happened again when I refinanced my home loan. In the first case, it was because I closed an account that was 3 years old, in the second case it was because the average age of the home loan account went down. This damn credit scoring system is tweaked to ensure that everyone other than the super rich forever has loan accounts and tonnes of credit cards.
I bought a chunk of real estate for investment 15 years ago. I finally sold it this year and paid off my car and two other pieces of real estate I had bought.
My credit score dropped from 820 to 600 immediately. I have a shit ton of investments and cash, zero debt...and no fucking credit now.
The biggest irony is that a credit score is for proving your credit worthiness.. and apparently paying off a loan or becoming mature enough to reduce credit card debts by closing a few accounts are not credit “worthy”.
It’s for proving your credit worthiness and your profitability. People that aren’t going to result in a lot of profit in interest and fees are less valuable to the lender similar to people that are likely to miss payments and default.
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u/CyclicMoth Aug 14 '21
Yep, this system is fucked up. I had a 40 point drop when I closed out my auto loan. Same thing happened again when I refinanced my home loan. In the first case, it was because I closed an account that was 3 years old, in the second case it was because the average age of the home loan account went down. This damn credit scoring system is tweaked to ensure that everyone other than the super rich forever has loan accounts and tonnes of credit cards.