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Posted in Auto Loans
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Question By
jujubee1990

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Why do credit reporters decrease your score because of closed auto loan accounts?
My credit score decreased by a lot of points for paying off my car loans in full. The account was reported CLOSED. Instead of increasing my score for the debt essentially being zero, my score decreased instead? I've already written to my auto loan company and disputed the transaction. How are you guys protecting consumers from this?

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That's because it removed one of your credit types, an installment loan, which hurts your account mix. A healthy account mix of all types helps your score, especially installment types such as mortgages. It happens to most people who finish their loan. I finished paying my 15 year mortgage and my credit dropped 60 points but I expected that to happen since I didn't have any installment type credit.

Remember credit scores are not for you but for finance companies to see how well you manage debt. Don't worry too much about it as I'm sure it'll rebound. You only need a good score when it's time for another loan. Keep your credit card utilization low, don't apply for too many credit cards and pay on time. That's all you can do.

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