Credit Advice

Mine did too! I paid it off over a year early and my credit rating went from 820 to 750. Grrrrrrrrrr!

Mine did too :(

I paid off my Mustang Cobra in 8 months after I got the loan, I saved thousands of dollars in interest over 15K, but it did not help my credit score. Yes, they look at credit mix and longevity of credit lines! In my case it was worth the major savings, even though it did not help my credit score! I figured at the time I paid off my sports car, that it would look good that I could repay the loan faster then I should have, but actually it back fired according to rules of credit! I feel that TransUnion, Experian, and  Equifax teach iresponsibility, by giving you a better credit score when you have more credit cards and loans you do not need. Also they do not reward and teach a person to be responsible by paying off old debt, instead if you pay off old charged off debt, it will count against you for at least two years after you pay it off! No wonder this country (USA) is so screwed up with finances!

I agree totally our credit system in many ways is *** backwards. I reduced the amount of credit on my cards, knowing i would never use nor need but my credit scores went down trying to be responsible also i will never understand that if one exceeds their toatal credit lines by charging more then 30 percent of what my limits are that also lowers ones score regardless that it gets paid off immediately.Also i have only two cards and have been told to have more if i want my score to increase.What a system 

Agreed.  te credit system is a## backwards.  I just paid off a car and got no increase  in my credit score.  How ridiculous is that?

Mine too!  And I was close to 840, went to 682 (fair)

wow...thx for that.  I was trying to figure out why my score went down, when I paid my car loan off (early), instead of going up :(

Thanks for that information. My credit score went from 604 to 599 in the space of 5 days, and i paid of my car a year early ie 5 years instead of 6. Saving 4375 a month so to hell with the lower credit score. Also starting to reduce my credit card bills, so i am sure it will go down again!!

You are SO right.  I had about $12k in bad debt that I ended up paying off in full 3 years ago.  My co-worker discharged $700,000 in bankrupcy and 2 years later his credit scores were the same as mine. CRAZY

I just asked the same question...I paid off my Honda CRV-LX a year early yet my credit score barely improved at all, but I did get financed for a newer vehicle that I've had a year now thru a different finance company...not my OWN credit union, so what's up with that? I thought I was doing a positive thing, since my credit has always been crappy since I was a young teen! Now 40 years later, still dealing with the same BS and really not a whole lot to show for it..I'm in limbo as well as trying to jumpstart my credit up again, just not sure how to go about it and I absolutely REFUSE to talk to harrassing collectors over the phone..a major mistake in itself :)

Just pay your credit card down every month and on time. You will see your credit improve in about a year. As to harrassing collectors do not take any calls. You should dispute each letter that you recieve. They will change collectors on you over the same bill but you must dispute it within the 30 day time limit given (ck web for form dispute letter). Make a file of each dispute and sent certified united states mail. THey will drop the harrassment and disputing said letters will prevent them from reporting it on your credit.

I actually tried to do this with a SallieMae student loan.  I owed something like 2,500 made a payment of 2,495... Within a couple of days they had closed the account, simpply writing off the difference. :/

mine actually went up from 680 to 700 and now is 760

Did the increase come from paying off a student loan?

Lol nice im going to try this, either im going to save five bucks or drag out my loans so my credit score is better

The average car today is built to last a minumim of 20 years. With proper care they can last much longer. Keep up with the maintence in the owners manuel and you can save alot of money. Have the car detailed regularly and you will find that you won't mind driving it.

Only in warm weather states. In NY you are lucky if the car doesn't rust before it is paid for. 8-10 years max.

Wow, you have that backwards. The quality of cars goes down regularly unless you are driving very high end cars. And even then. Cars built 20 years ago were built to last, cars built today are not meant to outlast their loans. And it's not accident.

It may have dropped points but look at all the money you saved by not paying interest on your loan. I'd say it was worth it. You can build your credit back up with on time payments on your credit cards.

Makes sense that your credit will go down after you pay off the loan.  Consider how the loaning insitution makes money:  They make money (aka interest) on the loan until it's paid off.   Really interesting game.  

I paid off my $7500 student loan in 1 and half year and I am still feel happy about it; I don't get the idea of pay minimum for over 30 years; sure, it won't build up my credit history and my credit score dropped a bit, but think of how much interests I have saved by paying it off asap..and guess what, my credit score now is 760, can't beat that!

I think it has something to do with increasing reinvestment risk on the lenders' side.

Yes the payments will go down and your score will go down because of the time that you are supposed to make your payments and when you really do make your payments determins what type of credit you can get and have. As messed up as it is and sounds, the banks want money so in turn they decide that if you pay it all off they can not make any more money from the interest on you, and therefore you are no longer a customer of theirs. (or the credit line)

It took me a while to understand it, but they look at the "ratio"... For instance it would be better for me if I had a total of $5000 available credit than $2500. So if I have closed the account that had a limit of $2500, I no longer have a total of $5000 available to me. I only have $2500. Geez when I read that back to myself it makes no sense LOL sorry but I was able to kinda grasp their way of thinking and I have been working to raise my score and so far it's working!

WTG for paying off the loan, Mike!

The avg consumer pays off debt and make new debt.

If it only dropped 40 pts, I'd do it. You will gain that back in a  year or so of not defaulting on anything else. Get a low limit credit card and use it for gas and pay it off each month. My score increased by 36 pts just by doing that. I kept the limit low enough that even of I maxxed it, I could pay it off each month.

If you look at it this way, it makes more sense... The credit bureaus are in bed with the credit industry. You would think paying off debt is a good responsible thing to do, but they want to keep you in debt because credit card companies make interest off of you.  What's the best way to deter people from completely paying off debt and living off of what they make instead of borrowed money?... create a fictitious number and lower it when you do something that is right for you and your family, but hurts the credit agencies because they are no longer making money off of your interest.   It is a perpetual cycle people buy into.  So a "professional" financial advisor may tell you paying off your debt and closing accounts is a bad thing and the best thing you can do for you and your family is to keep paying interest (throwing away your money) to keep a good score.  Sounds more like keeping up your payments with the mafia doesn't it?  Basically, you are paying credit card companies (interest) for a good credit score.   Is it worth the money?  To some maybe, but not to me.  (Stepping off my soap box now). 

If you look at it this way, it makes more sense... The credit bureaus are in bed with the credit industry. You would think paying off debt is a good responsible thing to do, but they want to keep you in debt because credit card companies make interest off of you.  What's the best way to deter people from completely paying off debt and living off of what they make instead of borrowed money?... create a fictitious number and lower it when you do something that is right for you and your family, but hurts the credit agencies because they are no longer making money off of your interest.   It is a perpetual cycle people buy into so a "professional" financial advisor may tell you paying off your debt and closing accounts is a bad thing and the best thing you can do for you and your family is to keep paying interest (throwing away your money) to keep a good score.  Basically, you are paying credit card companies (interest) for a good credit score.   Is it worth the money?  To some maybe, but not to me.  (Stepping off my soap box now). 

That makes alot of sense