Paid off my car way afraid of time why didn’t my credit score rise?
- MichaelLv 72 months agoFavorite Answer
You do not get "extra credit" for paying something off early. Also, part of your credit score depends on the blend of types of credit you have. Installment loans such as mortgages and auto loans are viewed to be more favorable than revolving credit such as credit cards. If, for example, your credit mix only included that auto loan and then some credit cards, paying off your auto loan leaves you with a "less favorable" mix. So, even though paying off this debt has improved your personal financial situation, your credit score takes a hit.
The lesson to be learned here is that what is good for your personal financial situation and what his good for your credit score are not always going to be the same thing.
Your personal financial situation is the more important of the two.
- 1 month ago
Your credit score takes 1 month to change because lenders only report to the three bureaus once a month. As soon as your car loan is reported, your score should go up
- A HunchLv 71 month ago
Your credit score is a reflection of your credit history.
When you paid off your car, your credit for that account stopped at that point and time with a description such as "paid off as agreed" (you didn't make any more payments).
- the credit bureaus don't know your loan agreement, they only know that the lender reporting as "paying on time" and that you don't owe the lender any more money.
- ShayLv 72 months ago
Because paying off early doesn't really matter.
Paying an account off in full doesn't even have that huge of an impact on your actual credit score. Paying off early makes little or no difference.
Having low or no balance on credit cards is a much larger impact than paying extra on an auto loan or paying off an auto loan. (or any other kind of loan.)
Improving a credit score is a long term process of making on time payments and keeping credit card balances very low. (10% or less is best. Anything up to 30% usually doesn't hurt. Anything above 30% card usage can cause your score to start dropping.)
It can also take up to 60 days from the date of paying off an account before you see a change in your score. It takes time for everything to get reported and updated.
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- JudyLv 72 months ago
Paying ahead of time does't cause scores to rise.
- 2 months ago
Believe it or not but that does not improve your credit rating. Banks want you to stay in debt and keep making payments to them. But don't worry about it. Early pay off will temp them to offer you another loan or credit card.
- Anonymous2 months ago
who said it would? Credit is built by paying ontime over a long period of time.
- Casey YLv 72 months ago
1. Reporting takes time.
2. As long as you were on time with your payments, dont expect any large jump. Expect an increase, but I wouldnt expect a huge number.
- CBLv 72 months ago
It takes some time for the credit bureaus to receive the information, that and paying off early isn't a big deal, paying on time is......but your outstanding credit liability has improved so there should be a bump soon.