Auto Loan Payoff

[Anonymous]

I hope this is the right place to ask this, if not, I apologize in advance

I had an auto loan with Wells Fargo that I actually just paid off yesterday..Yay!!!  My question is this:  When you pay off a car loan, does it increase your score significantly? And, if so, when am I likely to see this on my CR?  I'm trying to rebuild my credit and was just wondering

TIA

[DrJim]

It sounds counterintuitive, but it can actually decrease your score somewhat.  But, you'll bounce back quickly  I just paid off a car loan early also but have not checked my scores.

Do you have any other installment loans?  That might mitigate any damage that may occur.

Some of the other folks here might have a different experience, bu from what I recall in the past folks have seen 5-20 point loss that they recover pretty quickly.

[Anonymous]

My score dropped about 15 points several years back when I paid off my Jeep early. It did recover in about three months though.

I still have my 2005 Jeep Wrangler X, just put on a new top, new carpet, new roll bar covers, new stereo, a KN cold air injection and new neoprene seat covers. It looks like, or even better then new again. Love the fact that you can buy every part from just about every year jeep ever made.

[Anonymous]

Wow! I'm shocked!! It really doesn't make sense that paying off something...on time...no late payments..would DECREASE your score! That sounds kind of backwards to me...

The only other things I have outstanding are CC's are student loans which are in deferrement until early next year.... 

And here I thought once I got it paid off, it would help with me rebuilding my credit...Oh well..you live and learn I guess...*sigh* 

Chris123nTx...I have a Jeep too..hence the name Lol....Mine is a 2006 Liberty and I LOVE it!!! It needs new speakers (yes I like my music loud LOL) but other than that, it's been really good to me...especially during the New England winters...4WD is a God send then LOL

[Fico2Go]

It is to your advantage to delay paying off an installment loan.   If you come across a suitecase of cash or win the lottery just pay 90% of the loan.  Keep 10% balance as an active installment tl.   Many banks won't require you to make a minimum payment after a lump sum is paid; can buy years of having active installment tradeline while having no payment required.

[IrishPM]

Good question. I paid off my loan early with BMW Financial Services in March 2014....my FICO score dropped an average of 21 points across all three reports...seems a little odd that paying off an installment loan would be helpful because you're paying off debt but in my experience it actually lowered my scores.

[Fico2Go]

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@IrishPM wrote:

Good question. I paid off my loan early with BMW Financial Services in March 2014....my FICO score dropped an average of 21 points across all three reports...seems a little odd that paying off an installment loan would be helpful because you're paying off debt but in my experience it actually lowered my scores.

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Was the car loan your only active installment line?