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erazarita

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how will paying off an auto loan affect my credit score

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close one, open another

What if I pay off the loan and immediately take out a new loan for another car? My friend said her score bumped up when she closed one auto loan and took out another. Wasn't sure if that was what made the difference, so I would like to find out before I make any decisions.

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First let me say that if you can save some money in interest, saving money is a good thing. As for your credit scores, believe it or not, when you pay off a loan your credit will DECREASE. Open and active accounts is what builds and maintains good credit, so when you close one, that hurts your credit. The severity of the damage depends on how many open installment loans that you have, if this is your only loan, then damage would be greater than if you currently have a few open installment loans.

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