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paying off car loan

Established Contributor

paying off car loan

How will paying off approximately $10,000 balance owed on car loan affect my FICO score?  (nothing else has changed in my credit profile)  I've had the loan open since approximately 2009.  I had a couple 30 day lates on it but nothing late in the last 1 1/2 years.  Will this cause my score to go up slightly or significantly?  I had a lender pull my score on Monday and my EQ score was 517 at that time but I know it may be a bit before NFCU reports this loan as paid in full. 

Starting Scores 10/12: EQ 460 (FICO)/TU 502 (FAKO)/EX 474 (FAKO)
(7/14): EQ 572 (FICO)/TU 624 (FICO)/ EX 612 (FICO)

Current (2016): EQ 605 (FICO)/TU 657 (FICO)/EX 646 (FICO)




Message 1 of 8
7 REPLIES
Moderator Emeritus

Re: paying off car loan

I paid off my car loan (last open installment at the time) and also pulled my 2 FICO scores the day before it reported and the day after it reported. I knew exactly when it reported and was curious to see the result. The loan went from 25% of the org. balance to 0% and was about $6000 or so as a final payoff. My EQ FICO increased 7 points and TU FICO decreased by 5.

 

ETA...there were no other changes to my report to influence the change. However, it updated to TU on the 1st of the month and my TLs there aged which could have polluted the result. 

Message 2 of 8
Established Contributor

Re: paying off car loan

Thanks for the response.  I guess I was hoping to see a slightly higher score increase but that is better than nothing.  It has taken me 7 months to go up 57 points so it is very slow going to be re-building (my last and final time I swear!). 

Starting Scores 10/12: EQ 460 (FICO)/TU 502 (FAKO)/EX 474 (FAKO)
(7/14): EQ 572 (FICO)/TU 624 (FICO)/ EX 612 (FICO)

Current (2016): EQ 605 (FICO)/TU 657 (FICO)/EX 646 (FICO)




Message 3 of 8
Frequent Contributor

Re: paying off car loan


mt2va wrote:

Thanks for the response.  I guess I was hoping to see a slightly higher score increase but that is better than nothing.  It has taken me 7 months to go up 57 points so it is very slow going to be re-building (my last and final time I swear!). 


Took me 2 years so far, to go up 100 points....... Its a long road, but you learn a lot on the way.


Starting Score: 521 TU, 597 EQ, 574 EX on 6/20/2011
Current Score: 753 TU, 764 EQ, 766 EX on 02/17/2014
Goal Score: 720-740 Across the board


Take the FICO Fitness Challenge
Message 4 of 8
Established Contributor

Re: paying off car loan

Well apparently my score went down a point. Smiley Sad  Kind of disappointing.  I guess I got some dings for the credit inquiries, but really thought paying off such a large chunk would net me a few points.  Yes indead it is a long road. 

Starting Scores 10/12: EQ 460 (FICO)/TU 502 (FAKO)/EX 474 (FAKO)
(7/14): EQ 572 (FICO)/TU 624 (FICO)/ EX 612 (FICO)

Current (2016): EQ 605 (FICO)/TU 657 (FICO)/EX 646 (FICO)




Message 5 of 8
Valued Contributor

Re: paying off car loan


mt2va wrote:

How will paying off approximately $10,000 balance owed on car loan affect my FICO score?  (nothing else has changed in my credit profile)  I've had the loan open since approximately 2009.  I had a couple 30 day lates on it but nothing late in the last 1 1/2 years.  Will this cause my score to go up slightly or significantly?  I had a lender pull my score on Monday and my EQ score was 517 at that time but I know it may be a bit before NFCU reports this loan as paid in full. 


Generally speaking, getting and paying off car loans have a somewhat minimal effect on one's score.  Yes, one needs to have a good mix of credit, but in the scheme of things, the process of paying off a car loan (all other things being equal) shouldn't result in much of a change in score. Where it can get a bit more complicated is the number of total installment loans you have and the commitment to pay those loans, ie, the length of the loans. 

 

If one has only 1 car loan and no other installment loans, the response scorewise may differ from one who has a car loan and pays it off, but has 3 additional installment loans to pay.  I say this with some authority, as I'm currently showing 10 car loans on my credit report, 1 currently active, and the last time I paid one off, there  was practically no change in my score.  That said, at the time, I also had other installment loans.  I've also been in scenarios where I paid off a car loan and no other installment loans, and saw a modest decline in my score. 

 

As with everything creditwise...YMMV.  Just as a historical perspective from one consumer, this is what's happened to me in the past.

EX = 849 EQ = 850 TU = 850 as of 07/2017
Retired and Retiring Cards!
Message 6 of 8
New Visitor

Re: paying off car loan

I paid off 2 car loans ar one time, have zero balances on three CCs. had no other changes and have only a small student loan and my score went from 747 to 735. This is wrong...

Message 7 of 8
Epic Contributor

Re: paying off car loan

Try to let all but one of your CC report a 0 balance and the other at 9% or below.  This should give you a bump in score. FICO tends not to like all CC reporting a 0 balance.  However, with anything credit related, YMMV.

Message 8 of 8