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Message
Paid off my last car loan in full
Posted on 7/18/14 at 10:03 am
Posted on 7/18/14 at 10:03 am
Credit score dropped 30 points. 
I knew it would take a hit since the loan was 3 years old, but didn't expect 30 points.
I knew it would take a hit since the loan was 3 years old, but didn't expect 30 points.
This post was edited on 7/18/14 at 10:04 am
4
Posted on 7/18/14 at 10:26 am to vuvuzela
quote:
I knew it would take a hit since the loan was 3 years old, but didn't expect 30 points.
That is a problem for people who try to pay off cars early - I've had the same issue.
An alternative (and not for everyone, I might add) - is a HELOC where you tap the equity in your home, then pay it back on your schedule - if you always keep a small revolving balance, the loan life will continue to grow and grow. It can function like a mega credit card. You can tap it for short-term medical expenses, pay off credit cards, and, buy cars. It can get you in trouble and does tie up the equity in your home, but it can function as a buffer against the effects of losing the car loan's effect on your average loan length.
Posted on 7/18/14 at 11:18 am to vuvuzela
That is absolutely insane. The whole purpose of credit score is as a quick predictor of risk. By having PAID OFF your car, you have proven both that 1) you fufill your obligations and 2) you have additional money available now per month. In other words, you are a better risk today then you were last week.
Having an installment loan close out, because you paid it off, should not hurt your credit score.
Again, absolutely insane. This is why I don't play the credit score games. I just try to handle my obligations and try to avoid new credit unless I have a good reason for it.
Having an installment loan close out, because you paid it off, should not hurt your credit score.
Again, absolutely insane. This is why I don't play the credit score games. I just try to handle my obligations and try to avoid new credit unless I have a good reason for it.
Posted on 7/18/14 at 11:28 am to vuvuzela
quote:
Paid off my last car loan in full
:standingovation:
Posted on 7/18/14 at 1:47 pm to vuvuzela
Think about it - the goal of the credit system is to encourage people to take out loans/consume. That's how they make money. Frugality, for them, is bad for business.
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