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Frugalfysty

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Payed off a car loan of 18000
I payed off a 18000 auto loan, with no late pays. So why didn't that raise my score, My credit score was higher before my new loan. I only went through one bank and my apr is 2% on the new loan. So, why did my credit score drop so much?

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Your credit score most likely dropped due to the following:

  • Losing the old loan and adding the new loan decreased your average credit age (counts for 15% of your credit score)
  • A new hard inquiry was added to your credit report when applying for the loan (would result in a 3-15 point drop)
  • You lost an account that was open and in good standing when you paid off the loan (now would show up as closed and paid)

We all tend to think that our credit scores go up when we pay something off, but in fact the opposite can happen. Creditors like to see some sort of balance or payment history on an account so they assume that you are actively using and maintaining your accounts.

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I understand

Just had the same thing happen to me...  I went from a good high score and lost 30 points because we traded in a car and the old car was paid off.  Now my credit score is lowered.  Doesn't make sense does it.. 

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