Does closing car loan lower credit score?

In some cases, paying off your car loan early can negatively affect your credit score. Paying off your car loan early can hurt your credit because open positive accounts have a greater impact on your credit score than closed accounts—but there are other factors to consider too.

Is it good to pay off a car loan early?

Paying off a car loan early can save you money — provided there aren’t added fees and you don’t have other debt. Even a few extra payments can go a long way to reducing your costs. Keep your financial situation, monthly goals and the cost of the debt in mind and do your research to determine the best strategy for you.

Does paying off a car loan early hurt credit?

Credit mix

If you pay off a car loan early and it’s your only installment account, your credit score could take a hit. And if you have very few credit accounts, the hit to your score could be even greater.

How much does your credit score increase after paying off a car?

Once you pay off a car loan, you may actually see a small drop in your credit score. However, it’s normally temporary if your credit history is in decent shape – it bounces back eventually. The reason your credit score takes a temporary hit in points is that you ended an active credit account.