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My credit score tanked 45 points because I didn't realize paying off a car loan early hurts you
Paid off my Honda Civic loan six months early thinking it would look good on my credit report, then my score dropped from 740 to 695 because the closed account shortened my credit history age, so has anyone else gotten burned by doing what seems responsible?
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skyler_jackson277d agoMost Upvoted
A 45 point drop on a 740 score is nothing though, you'll bounce back in a couple months if you keep using credit for other stuff. The real loss is the interest you would have paid by keeping that loan open an extra six months. At 5% on a $15,000 loan you probably saved around $375 in interest by paying early. People get way too scared about temporary score dips when the actual money saved is right there in your pocket. Credit scores are just a tool for lenders to make money off you, not a measure of your financial intelligence.
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finley_gonzalez497d ago
Paying early saved you money sure but a 740 dropping 45 points can cost you way more on a mortgage rate.
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