Just learned my credit score dropped 40 points for paying off a car loan early

I paid off my 3 year old Honda loan 8 months early and my FICO score went from 742 to 702. Read on a credit blog that closed accounts can actually hurt your mix of credit types. Nobody tells you that finishing payments punishes you. Has anyone else taken a hit for being responsible like that?

3 comments

3 Comments

the_fiona15d ago

Read on Credit Karma that LENGTH of credit history matters more than people think.

kim.nina14d ago

That's the tricky part with Credit Karma and FICO, the formulas weigh the age and mix way more than people realize. So closing a decent sized installment loan on time can actually backfire since you lose that positive active history from the equation.

gavin46915d ago

My buddy Mike paid off his truck 6 months early and his score dropped 45 points. He called the bank freaking out and they said it's because his average account age went down when the loan closed. It messed up his credit mix too since he only had that installment loan and a couple credit cards.

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