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How much does my credit score go up when I pay my car loan off?
I'm going to pay off my car loan in the next few months, but I want to know how much my credit score will go up. How much can I expect it to increase?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Paying off debt is always a great feeling! Although it seems counterintuitive, paying off your
car loan
can actually drop your credit score temporarily for a variety of reasons. Credit scores take into account your current credit, not your credit history. The reason your credit score goes down is that:
- You lower the amount of credit you have
- Your credit mix has one less installment loan
- The length of your total credit falls
However, your lack of a car loan will also free up money for other expenditures or a down payment for another car, so it’s not all bad. As long as you continue to make smart financial decisions and pay your bills on time, you should see your credit score rebound.
In the meantime, you can save even more money by switching your car insurance. Use the
Jerry
app to search rates from 50+ insurers, like Nationwide and Travelers, in seconds. Jerry helps you get the best price for your coverage needs without any hassle.View full answer
- Gregory R.
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