Why Did Your Credit Score Drop After Paying Off A Loan?

In this video I discuss reasons why your credit score dropped after paying off a loan and discuss questions you should ask yourself if you are considering paying off a loan early! Be sure to stay subscribed if you are interested in personal finance, investing and all things credit!

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Disclaimer: I am not a financial advisor. Jacob Kustra does not provide tax, legal or accounting advice. This material has been prepared for entertainment 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.

If you have any questions or comments, leave them down below!

[WithloveTrinize]

My son who is 23 has a credit score of 742 which is better than mine😫 I walked him in his credit journey back in my day my parents didn’t teach me so I wanted to make sure he understood! Great video

[coalknob]

my credit score dropped 40 points because I paid a car loan off early. I'm perfectly fine with it. I am tired of feeding into this garbage financial system. "title in hand"

[QueensNY]

My take on this video is that paying off a loan save you a lot of money. Your credit will take a hit for 3 months, but they it will be even better afterwards. Also, paying off a loan early will give you peace of mind, which is something that its even better than having a perfect score. If your score is about 730, you are good to go.

[fairarthur]

I don't care what nobody says credit is designed to keep you in debt. You are basically a slave to the lender.

[Sammy-clft]

This makes so much sense!! I just recently paid off a loan and felt so defeated that my score went down. I will definitely keep this in mind before paying off other loans!

[Daniel_Braun]

Loved those 5 questions to ask yourself when paying off a loan! I’ll be paying off a loan very soon here and definitely considered all of these questions. Nice video Jacob 👍

[kubatik]

That you for the case study. I was thinking about paying off my student loans but I think I'll hold off until I secure another card I've been eyeing!

[Drogos]

I have 10% car loan left to pay off. I was planning to pay it off to improve credit score and then apply for new loan....I am now learning I might want to keep the old loan to keep the installment loan in the credit history. I don't want to trade my old car in. I want to sell it for cash. Thanks mate

[laurachamberlain]

I traded my car in with a $7k balance and bought a car with a $14k balance. For the last two weeks, my score went up 70 points for many other reasons but it showed I had $21K balance for both cars. Today, the car I traded closed and this dropped my score 30 points. Yes I have a smaller balance but seems I would have been better off with more debt. I hope it goes back up because I worked really hard to get it up those 70 points.

[sgrealtor]

Dude good stuff! Love the quality and info! Credit scores are so finicky and I pretty much had to learn everything on the fly a long time ago! haha. Keep up the great work man.

[HiddenGemindasunshine]

Thank you so much I'm in this situation. I'm paying off my car early and my Score is dropping

[johndalebaltazar]

Paid off my loan early few months ago and mine went from 725 to 635. Im in shock to how much it dropped

[AMHlocal]

So I just paid off my car loan with a 17.97% APR. I still have my student loans to pay off and plan to pay them off as quick as I can. I want my debt to income ratio to improve so I can eventually get a mortgage and start building to the home of my dreams.

[shakiramcgee]

I paid off my car loan and my score dropped 61 points. I am sick🤦🏽‍♀️🙏🏽

[ItsMeCJ]

Interesting that your friend’s credit score recovered so quickly. My score before paying off my car loan was 804 and after paying it off, it dropped to ~791(I don’t remember the exact number). I do know that it took well over a year for my score to get back above 800 though….then I applied for the CSP 🤣.

[sudhisira]

So this is different from paying off a credit card balance? In case of a loan, if you pay it off, it vanishes. But in case of a credit card, the card and its credit limit is still there and your credit utilization ratio actually rises.

[dariovictor]

It's a game. Got my scores to 700(except Experian 😤 always my lowest score). Unless I purchase a home or car loan my score will not go higher. Probably drop 🤷‍♂️.

[KiltedVeteran]

I just paid off the rest of my student loans in one lump sum (approx. $30K) and it dropped my score drastically.

[Dividendology]

Well put together and we’ll explained! You got a sub from a fellow creator!

[DoorDashers]

The fico score was created to keep you in debt.. if you're not paying on anything you will have no score... unfortunately nobody is lending now anyways. 😕