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Car Loan Paid Off = Lowering of Credit Score

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
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Car Loan Paid Off = Lowering of Credit Score

So I recently paid off a car loan, on time, and one of my credit scores took a 22 pt dip.  Why would that be?

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Valued Contributor

Re: Car Loan Paid Off = Lowering of Credit Score

utilization?  

credit mix? 

 

Do do you have any other installment loans?

Rebuild started in 2014  -  $100k total unsecured credit in 2017  -  $200k+ total unsecured credit in 2019.

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Message 2 of 4
Frequent Contributor

Re: Car Loan Paid Off = Lowering of Credit Score


@NiColeP wrote:

So I recently paid off a car loan, on time, and one of my credit scores took a 22 pt dip.  Why would that be?


Only lost 22 points? You got off cheap. I lost 40 when I paid off my car note and another 60 the next month when I paid off my mortgage. That left $1200 a month free in my budget, no debt and my credit was trash.

4/1/2017 EQ 579 TU 595 EX588
9/20/2018 EQ 810 TU 807 EX 795
6/12/19 EQ 820 TU /789 EX 793


Message 3 of 4
Frequent Contributor

Re: Car Loan Paid Off = Lowering of Credit Score

Credit Mix.  If your auto loan was the only active installment account you had, you would lose a big chunk of the Credit Mix portion of the score when it was paid off.

 

Past accounts generally don't matter for evaluating credit mix in most FICO scoring models, so only the accounts that are open and active will grant you points.  There are a few options for getting them back if you're motivated, like buying another car or house, or a less expensive method such as opening a secured loan and following the technique described here:

 

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Sec...

 

 



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