Credit Score?

Question

I recently paid off my car. If I had kept making payments, it would have been paid off sometime next year, but I thought I'd help my credit my paying it off. Boy was I wrong. I just looked at my credit report and it went down 13 points!!!! I don't get it. I thought eliminating debt was supposed to be a good thing. Especially when I've been making payments for the past 5 years!! Why did it go down?

Christin K · Answer

It could be any reason, actually--a drop of 13 points isn't much. Scores go up and down all the time. When you do not pay AS AGREED--(i.e., paying monthly, on time and in the amount you signed up for) then even paying the debt off will result in a TEMPORARY drop--this will rise again as you continue to use credit and pay as agreed. Eliminating debt does not build credit--it eliminates credit. It's nice to have that extra income every month, but credit companies want you to KEEP paying, not STOP paying. Don't worry about this drop--it will come back up.

StephenWeinstein · Answer

Probably for a totally unrelated reason.  Credit scores normally go up and down by 10-20 points all the time without any apparent reason.  A difference of 13 is not significant.  If you look again in six weeks, it might be up again.

Anonymous · Answer

13 points is fairly meaningless. Certainly not worth paying interest over.

Slickterp · Answer

13 points does not matter.  That said, it goes slightly down in the short term because of less available credit.

A Hunch · Answer

Because you removed an installment loan.
Credit scores are based on credit behavior.

No one cares about 13 points.

Anonymous · Answer

Yeah seems weird but when you payoff it reduces the number off accounts you have which lowers your score a little. That's how they keep us in debt.

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Credit Score?

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