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?
Apr 27, 2021
Answer provided by
Answered at Apr 27, 2021
“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.”
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.
Browse by topics
What others are asking
Are there any hidden fees I should be aware of before taking out a car loan?
I'm trying to budget out the cost of financing a car. What hidden fees should I consider?
Mar 18, 2021
Does standard renters insurance cover earthquake damage in quake-prone areas?
I'm moving to San Francisco, so I want to know if renters insurance will guard against earthquakes there.
Apr 13, 2021