What will paying off my car do to my credit? Improve or harm?

[Anonymous]

I just paid off my car, will my score go up or down? I actually had two car payments...dont know if that matters. I also paid about 16k in one lump sum to pay off the car. Again, not sure if that is a relevant factor. Thanks!

[SamsungHDTV]

I think you should cross post in 'rebuilding credit' as they might know this matter a little better.

In my opinion, its one of those YMMV cases. Could go up or down depending on the rest of your credit profile, but nobody will really know for sure.

[CH-7-Mission-Accomplished]

There are routine reports of credit scores dropping 15 to 25 points when an auto loan is paid off.

Supposedly this will not happen if you still have other installment loans.

I have heard of people with student loans still reporting who also took a similar hit.

As stated, you won't know until it happens, but you should be prepared for this possibility.  Not much you can do though except open another installment loan and wait six months to get some of the points back.

You also might see very little or no impact at all.  But I have never seen a report of a credit score increase with payoff of an auto loan versus hundreds of reports of decreases, sometimes dramatic decreases.