Will paying off my Tesla car loan improve my credit score?

I want to pay off my Tesla car loan now, but only if it will improve my credit score. How much can I expect my score to change?

Though finishing off your Tesla’s car loan payments seems like an easy boost to your credit score, doing so will actually have the opposite effect (albeit temporarily). Depending on the rest of your credit profile, your score could drop by anywhere from five to 30 points.
Paying off your car loan changes your credit mix, or the blend of revolving credit (credit cards, lines of credit) and installment loans (car loans, mortgages) in your profile. Your score is higher when you have more of each and are keeping up with your payments.
If your car loan is your only installment loan, the balance of your credit mix will change, decreasing your overall score. Your score will also drop if you pay off the entire loan while your outstanding balance is large—in contrast, you would build up your score by making payments over time.
While it won’t build your credit, finding a cheaper car insurance plan can free up some extra cash. With the Jerry app, you can compare competitive quotes from up to 50 top insurers for free. Nothing sounds better than that, except for maybe the quiet hum of your Tesla.
Eric Schad
Answered on Oct 21, 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.

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