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I have an auto loan that I got in May 2006 and paid off in 2010. I've heard that after 10 years it comes off the report. I had no missed payments on the loan, so it was only helping my score. Once it's gone, will my score go down? My average age of accounts and total accounts are already in the poor category according to Credit Karma.
@Anonymous wrote:I have an auto loan that I got in May 2006 and paid off in 2010. I've heard that after 10 years it comes off the report. I had no missed payments on the loan, so it was only helping my score. Once it's gone, will my score go down? My average age of accounts and total accounts are already in the poor category according to Credit Karma.
It should stay on until 2020. And yes, it will likely lower your AAoA when it drops off. Your score might go down at that time. Is this your oldest account?
Yes, the 2nd oldest is a credit card I opened in 2007. So the auto loan comes off 10 yrs after it was paid off, not after it was opened?
CRA housecleaning of old accounts does not occur until the account has been closed for approx ten years.
They wait that period so that most adverse items that may have been reported will already have become passed ther normal credit report excludsion dates, and thus the account will not show complete history, and is considered to be "deleteable"
Use of date opened could result in improper deletion of sitll-active accounts.
@RobertEG wrote:CRA housecleaning of old accounts does not occur until the account has been closed for approx ten years.
They wait that period so that most adverse items that may have been reported will already have become passed ther normal credit report excludsion dates, and thus the account will not show complete history, and is considered to be "deleteable"
Use of date opened could result in improper deletion of sitll-active accounts.
And note Robert's use of the word "approx". It's not a hard and fast rule that it MUST come off at 10 years. Just that it usually does.
That said, I have a positive TL that has now been on my credit report...for 16 years! I check my actual reports details every quarter or so and when I checked this quarter, it's still there! Could be due to a lazy lender, but I won't quibble about it!
@Anonymous wrote:I have an auto loan that I got in May 2006 and paid off in 2010. I've heard that after 10 years it comes off the report. I had no missed payments on the loan, so it was only helping my score. Once it's gone, will my score go down? My average age of accounts and total accounts are already in the poor category according to Credit Karma.
Something tells me it will not hurt your score, as people have reported 850 FICO 8 scores without any open or closed instalment loans.
@Anonymous wrote:I have an auto loan that I got in May 2006 and paid off in 2010. I've heard that after 10 years it comes off the report. I had no missed payments on the loan, so it was only helping my score. Once it's gone, will my score go down? My average age of accounts and total accounts are already in the poor category according to Credit Karma.
It sounds like our OP is really asking about two things:
(1) The possible effect of a particular account dropping off her report, and
(2) The trustworthiness of Credit Karma in some advice it has given her
Let's take #1 first. There's no doubt that the account falling off will lower two things. It will lower her Average Age of Accounts (AAoA) and it will lower another important factor from that category, the Age of Oldest Account (AOA). So there will be some score drop at that point, from whatever her score is in 4 years from now. If it is her only installment loan, open or closed, it will damage her Credit Mix category, particularly in the Auto Enhanced flavor of the FICO scores.
With regards to #2, I am personally a fan of Credit Karma, when it is used rightly. It is invaluable as a tool for pulling your reports. It is also good for a person on a budget (doesn't want to pay for a credit monitoring service) -- she can use it as a long range guidance tool for credit improvement, i.e. Are my Credit Karma scores gradually going up over time, as I engage in good credit habits?
Karma is a bad choice, however, when it gives you advice about your AAoA or your total number of accounts. Karma uses Vantage Score, not FICO, and therefore it computes AAoA by counting only your open accounts. FICO uses both open and closed accounts and it allows closed accounts to age. Furthemore, Karma is a credit monitoring service (CMS), and therefore it makes its money by trying to induce its members to feel like they need more accounts and then click on appropriate buttons inside the site to add more cards, for which the CMS gets a kickback. Almost every CMS therefore tends to greatly overinflate the number of accounts you need on your profile. Even myFICO does this: somebody recently wrote in worried about a message myFICO had given him suggesting that his seven open cards was not enough (!!!), and he needed to add more to get a better score.
If the OP wants better advice, which the folks here will be happy to give her, she should learn how to compute AAoA using the FICO approach. This an important skill for anybody to develop. There are tools out there that can help her do this (personally I am a fan of creating a spreadsheet). She should then list her accounts and how old each one is. Of particular interest is how many open credit cards she has and whether this closed installment loan is her only loan, closed or open. Most importantly she should describe her CC utilization and whether she has any negative information on her reports (lates, collections, chargeoffs, liens, etc.).
Best wishes....