PriceProtect™
DriveShield™
GarageGuard™
Services
Insurance
Car Insurance
Compare Car Insurance with Jerry
Jerry’s Expert Advice
Car Insurance Estimates
Home & Renters Insurance
Renters Insurance
Loans
Car Loan
Compare Car Loans with Jerry
Jerry's Expert Advice
Car Loan Guides
Repairs
Car Repair Estimates
Repair Estimates for Popular Services
Advice
Read Car Content
Browse Jerry Car Advice
Check Out Expert Car QnA
Learn About How We Create Content
Jerry Data & Research
Does paying off a car loan improve my credit score?
I'm due to pay off my car loan in two months. How will this impact my credit score?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Great job on getting to the end of your
car loan
. While paying off your car loan may seem like something that will increase your creditworthiness, your score may temporarily decline after you pay off your loan.The reason that your credit score drops is because your credit report doesn’t use completed loans as part of its score rating. Instead, your car loan being closed indicates one less line of credit open on your credit report.
This results in a lack of credit mix, or the amount of installment and revolving credit you possess. Your credit score is more likely to drop if you have fewer other lines of credit open.
However, you shouldn’t stress if your credit score drops. It should return to its previous number within a few months to a year.
Since you paid off your car loan, you’re no longer required to hold the amount of coverage your lender requires. Whether you choose to stay with full-coverage or switch to liability-only, download the
Jerry
app to compare quotes from up to 50 top insurers for free.View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
Join 4M+ members in lowering their car insurance
You Might Also Be Interested
Read Advice From Car Experts At Jerry
What Others Are Asking
.jpg&w=64&q=75){kind=avatar}
Browse More Content
Insurance for Your Car
Insurance in Your State
Easiest way to compare and buy car insurance
No long forms
No spam or unwanted phone calls
Quotes from top insurance companies
