Epic Contributor
Posts: 23,364
Registered: ‎03-19-2007
Re: Need help understanding a closed auto loan while opening a new auto loan.
[ Edited ]

The paid loan will, as stated, probably have little impact, as install loan % remain against orig balance is not weighted anywhere near the % util on a revolving account.

The paid loan will continue, even though the account is closed, to score in your avg age of accts, and possibly be your oldest acct, so it wont affect your lenght of credit history calculation.  You will only lose its value in your AAoA calc when it reaches approx ten years from date closed, when the CRA will then probably exercise its arbitrary deletion of that account from your file.  A long way off.


However, it is most likely the new acct that will affect scoring, not closing of the old.

They will most likely do a hard-pull when evaluating the grant of that credit, and if approved and reported, will show as a new trade line with zero age.

It will thus enter into your AAoA calculation with negative effect.  How much will depend upon your AAoA before and after the new trade line.  You can do the math.

The effect of the hard-pull is fleeting, as it disappears from scoring after one year, but the AAoA effect lives on. 


Length of credit is 15% of total scoring, so I would opine that is where the impact will most likely show.


A separate but still important effect, aside from any scoring impact, is the fact that continuing to maintain any active trade line in good standing can be a positive reflection when any future creditor does a manual review of your credit report.  That may be important if and when, for example, you shop for a new auto loan in the future.

It is not limited only to FICO scoring impacts.