18 point drop in experian after refinancing my car?

[Anonymous]

I don't understand this at all. I refinanced my car at a much lower interest rate. The term of the loan has me paying off the car at the same time my old loan did. The loan i paid off, wells fargo, now reports zero balance and experian just wacked my score by 18 points? Is this common? What should I do?

[EddieK]

Is your new loan reporting yet?  If not, if you closed your only installment loan, you lost points due to not having one now.  You'll gain back some points once the new loan starts reporting.

[Anonymous]

I experienced a similar reduction when I refiananced, don't worry, the scores will come back up in a few weeks.  

[Anonymous]

Basically what happens is you will now have an installment loan that needs 100% of the amount paid back. After a few payments it will raise back up (there's a magic percentage around here you can search for that maximizes your score, I think it's under 65% of the loan left to pay back). 

[Anonymous]

Thanks all. I did some research. I can't believe paying off a loan does that. I guess my new loan hasn't reported. This is crazy.