31pt drop after paying off Upstart Personal Loan

[FicoMike0]

There's a lot of trick or treat with credit scores. I'd call this one of the tricks.

[indiolatino61]

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@tjmolly wrote:

How da fk does my Experian score drop 31pts after paying off my personal loan from Upstart? What kind of scam is this FICO bs? I'm considered higher risk having a personal loan and then when I pay it off, it drops 31pts from the 800s to the 700s. Total BS!!!

Experian-31

788

June 16th 2025 6/16/2025

An account listed on your credit report has been updated

Credit change

• Company Name

  UPSTART/RRCU
  • Company Name

    UPSTART/RRCU
  • Address

    PO BOX 1503,SAN CARLOS,CA
  • Business Type

    Finance - Mortgage Companies / Credit Unions / Investments
• Amount

  $0.00
• Status

  Paid loan

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I feel your pain. I wonder what psychopath at FICO deemed it a negative to pay off a loan, or not owe anythng on credit cards, or not having a huge mortgage payment. I can only hope that credit granting establishments have learned that FICO scores do not always reflect a true risk indicator. I hope they go into further data and see that a customer recently paid off a loan (a great thing) and that is the reason the score decreased. Too many FICO iterations in my opinion, so customers can never truly know what FICO is doing. Just my 2-cents.

[Realist]

Doesn't seem consitent with anything that I'm seeing.  How thick is your credit profile?  How large was this payoff?

Anything of note can move a FICO score.  It's a change that wasn't there prior, resulting in a sometimes noticable action and score change.  The effect of that change is determined by any number of behind the scene calculations.  How thick a credit profile, how diverse your loans (lenders want to see fortitude and a healthy mix of credit), did you kill off a certain mix of credit type?  

[Gregory1776]

If you pay it off in full you'll see a decrease in score, when there isn't another loan reporting. 

I paid off my loan to 8.9% to avoid this. Couple bucks a month until the end of next year, at which point I'll get an SSL, another loan (car?) or deal with the score drop. 

[FICOdawg]

PREACH BROTHER PREACH!!!    LOL

FICO actually has clauses in contracts that FORBID use of other branded scores or even generating their own score.      Banks can EASILY replace FICO and thus why FICO spends money on lobbying.    

The FICO scoring system rewards debt/loans and opening credit cards so long as you keep aggregate utilization <30%.

[hdporter]

The only issue here is "FICO obsession syndrome"

781 is a great score:  You're unlikely to be rejected for credit and will most likely receive the best terms available.

FICO works on broad variables.  Without an active installment loan in repayment, it loses a scoring metric.  The impact on a high score individual is magnified.

Still, this score decline is of no practical significance whatsoever (in the context of the credit marketplace), unless you pin a portion of your self esteem on being a member of the "800+ FICO" crowd.

[Realist]

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781 is a great score:  You're unlikely to be rejected for credit and will most likely receive the best terms available.

 I find this to be the biggest challenge for most people.    Obsessing over what the month to month moves are going to do.  

I was a co-signer on a loan, loan got paid off, my score dropped six (6) points.  I care not, it'll jump back up next month or two.  No time to worry about that.

[FICOdawg]

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@hdporter wrote:

The only issue here is "FICO obsession syndrome"

781 is a great score:  You're unlikely to be rejected for credit and will most likely receive the best terms available.

FICO works on broad variables.  Without an active installment loan in repayment, it loses a scoring metric.  The impact on a high score individual is magnified.

Still, this score decline is of no practical significance whatsoever (in the context of the credit marketplace), unless you pin a portion of your self esteem on being a member of the "800+ FICO" crowd.

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Going to disagree here.    Sure 781 is good score but "getting approved" doesn't always equate to getting the best interest rate.     There are many CCs and loans that require an 800+ score.    So while you may get the credit line you seek, sub 800 can cost you more money.     

To you point about FICO obesession, that matters more when people make decisions that are financially unwise simply for the sake of their score -or- if you aren't applying or need credit in the short term then of course FICO needs be secondary to doing the smart financial thing (whatever that may be)

[Pppoolboy]

LOL FICO scoring algorithms are screened by the Feds (specifically the FHFA) and can't be "out to get you."  If you have no loans reporting, you're penalized because the scoring system can't see that you're being a good kid and making your monthly payments; thus your risk is somewhat higher.

FICO scores have one objective: to gauge how likely you are to go 90 days or more late on a loan within the next 24 months.  Consumer credit scoring systems can't show biases toward any protected classes of consumer (race, religion, nationality, etc) which is why FICO uses a less-efficient "scorecard" system rather than pure machine learning (now called AI).  The company found years ago that scoring algorithms based on pure machine learning tended to disadvantage certain areas of the country and were essentially the same as "red-lining" which would have gotten the company into a whooole bunch of trouble.

Therefore FICO had to come up with a "scorecard" system which is easier to justify to government regulators.  If FICO felt it could do away with that system and go with pure machine learning, it would do so in a second.

[FICOdawg]

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@Pppoolboy wrote:

LOL FICO scoring algorithms are screened by the Feds (specifically the FHFA) and can't be "out to get you."  If you have no loans reporting, you're penalized because the scoring system can't see that you're being a good kid and making your monthly payments; thus your risk is somewhat higher.

FICO scores have one objective: to gauge how likely you are to go 90 days or more late on a loan within the next 24 months.  Consumer credit scoring systems can't show biases toward any protected classes of consumer (race, religion, nationality, etc) which is why FICO uses a less-efficient "scorecard" system rather than pure machine learning (now called AI).  The company found years ago that scoring algorithms based on pure machine learning tended to disadvantage certain areas of the country and were essentially the same as "red-lining" which would have gotten the company into a whooole bunch of trouble.

Therefore FICO had to come up with a "scorecard" system which is easier to justify to government regulators.  If FICO felt it could do away with that system and go with pure machine learning, it would do so in a second.

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This should be made very clear, FICO is absolutely NOT regulated.   In fact, many have called this out as a need.   FICO is a monopoly and just how the market formed if you read about the history of FICO and the CRA since the late 80s/early 90s.