19
My bank told me my credit score dropped 40 points because I paid off a car loan early
I closed out a $12k auto loan last year thinking it looked good on my report, but the loan officer explained how paid-off installment loans age off faster than revolving credit, and now I'm stuck rebuilding with two credit cards, has anyone else been hit by this same surprise?
3 comments
Log in to join the discussion
Log In3 Comments
nora_park722mo agoMost Upvoted
Honestly used to think paying off loans early was always the smart move lol. This definitely changed my mind after seeing how the credit system actually works.
10
laura_lane2mo ago
Did the loan officer explain if the 40-point drop is temporary or if it actually stays that way for a while? I've heard conflicting things about how long a closed installment loan keeps dragging your score down. Just trying to figure out if this is a short-term hit or something you have to plan around for months.
1