Selling car kills score??

[Anonymous]

Good evening all, quick question. I am selling my car about 8 months shy of the full 54 month term, I have never been late on the account always on time, I have learned that your score will or can take a major hit for the account being paid early and closed when the car is sold. Is this really the case?

[Anonymous]

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@Anonymous wrote:
Good evening all, quick question. I am selling my car about 8 months shy of the full 54 month term, I have never been late on the account always on time, I have learned that your score will or can take a major hit for the account being paid early and closed when the car is sold. Is this really the case?

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NO. You 'may' lose some points, but its usually far from a "major hit". Its relatively easy to prevent as well. Simply take a small ($500) secured personal loan from a credit union a few months before your auto loan pay-off. Make sure its one that you can "pay ahead", and after the first payment you pay it down to 10 percent, then just let it ride for the rest of the term. Your scores won't even notice that auto loan payoff.

[RonM21]

Yes this is possible because of your credit mix. Fico likes to see a mix of accounts, like credit cards, mortgage, and installments. If this installment account is the only one you have, you would not get the full amount of points for this part of the scoring. If you have 2 accounts like this, you may not see a fall. Some have have reported a rise in their score. YMMV.

[Anonymous]

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@RM21 wrote:

Yes this is possible because of your credit mix. Fico likes to see a mix of accounts, like credit cards, mortgage, and installments. If this installment account is the only one you have, you would not get the full amount of points for this part of the scoring. If you have 2 accounts like this, you may not see a fall. Some have have reported a rise in their score. YMMV.

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It should be pointed out that "credit mix" is a very small part of the scoring factors - the smallest in fact, at 10%. Payment history and Balances (UTI%) combined are 65%.