Auto refinance question

[Anonymous]

Ive read on here that when you pay off your auto loan it can hurt your score. Yesterday I refinanced my truck through a different lender so the trade line with the old lender will become closed. Will the fact that I opened a new trade line with the new lender mean that it won't effect my score?

[undrtkr65]

I'm not sure if a auto loan will do that. I do know when I transferred my installment loan balance to a 0% interest credit card it dropped my score almost 30 points. However I'm saving a ton of interest since my loan interest rate was 29%. I just refianced my auto loan as well so I guess it will drop my score again. I will let you know the outcome onces everything updates.

[JBjunior]

Yes, you will get credit for having an open installment loan even though the other one closed.  It isn't a one for one though, since those equal each other out (relatively), you will still have to contend with the loss of AAoA for the new account and the inquiry.

[Appleman]

Another potential factor is that you had paid a percentage of your previous loan (let's say you have paid off 20% of the original loan balance), with the new loan your utilization will be at 100% (this is no where near as bad as having a credit card report over 90%). The short term may see a slight tick downward but I expect it will be a wash before long.