paying off credit cards and loans

[Waterboy122]

I thought paying off credit cards and loans would help my scores but they have been plummeting with each item I pay off. I paid of a boat loan and my score dropped another 15 points. This is not right!

[Gunnar419]

It may indeed be not right, but unfortunately it's common.

Generally, installment loans only help credit while they are actively being paid. I agree that they should continue to help our credit even after they are paid off and especially if they are paid off early, but they don't.

If you otherwise have good credit (no lates, bankruptcy, charge offs, judgments) then the best way to keep and grow a good score is with careful use of credit cards. Have at least three, keep overall utilization low, have only one card reporting a balance at any one time and keep that balance low. If you do that and keep doing it, then the imact of closed installment loans will hurt less.

I know it's not the answer you're looking for, but credit scoring is a system whose rules we don't make. We can only try to learn how the game is played and use our best strategies. Good luck.

[Waterboy122]

Thank you, that was helpful.

When you say 3 credit cards, would private label / retail cards such as Kohl's and Tire's plus count for the 3?

[racer-x]

2 regular credit cards and 1 store/retail card.

What are your scores, income, negs, etc....?