Why did my credit score drop after paying off my car loan?

I paid off my car loan last month. When I went to check my credit score yesterday—it had dropped 50 points. Why did my credit score drop for being responsible and paying off my loan?

“Odds are that when you paid off your car loan, you no longer had any installment loans. An installment loan is something that’s paid every month, while a credit card is called a revolving loan.
To keep your credit score high, you need a mix of revolving and installment loans. A 50-point drop seems substantial enough for you to find another type of installment loan.
Some credit unions offer savings loans or low-interest personal loans to boost and diversify your credit. With such a drop, paying a few bucks a month in interest might be worth it to get your credit score back up.”
Eric Schad
Answered on Apr 27, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

Did this answer help you?

Ask us a question by email and we will respond within a few days.

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
4.7/5 Rating on App Store