Does your credit score go up when you pay off a car loan?

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  • August 26, 2023 at 8:39 pm #11984
    StellarFi
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    August 26, 2023 at 8:40 pm #11987
    Team StellarFi
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    Paying off your car loan initially drops your credit score by a few points because the length of your credit history and credit mix are affected. In the long term, it reduces the amount of debt you have incurred. Because it is a fairly long-term debt, your car loan payments can significantly contribute to your credit score.

    Additionally, even after you have paid off your car loan, it will remain on your credit report for ten years. But a paid-off car loan can no longer add to your credit score. It will free up your finances for other investments and even loans.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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Credit score increase based on StellarFi members’ data. Credit score increase not guaranteed. Credit scores will only be available to members whom we are able to validate. On-time payment history can have a positive impact on your credit score. Nonpayment may negatively impact your credit score. Failure to make monthly minimum payments by the due date each month may result in delinquent reporting to credit bureaus, which may negatively impact your credit score..