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If I pay the loan off my Chevy Silverado, will it instantly increase my credit score?
"I have the cash to pay off the final two years of my car loan on a Silverado.
Will paying this loan off instantly increase my credit score, or will it have a different effect?"
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Actually, paying your loan off in full will actually decrease your credit score.
The reason that this will lower your credit score, albeit by maybe a few points, is because you no longer have as many open credit accounts. When you have more loans and debt that you’re paying on (open accounts), this can increase your score. By paying off the loan, and closing an account, you will lower your score.
But don’t stress too much. This drop in credit is only temporary. Within a few months, lenders will appreciate the fact that you paid off this loan, demonstrating your ability to get a car loan or mortgage in the future. Plus, you’ll save a ton of money on interest by doing so.”
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- Gregory R.
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