Why does credit score drop after paying off a loan?
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the more lines of credit that you have that you’re able to successfully pay for every month, the “safer” you are to lend money to. it shows you’re able to handle a lot of debts at once without missing any payments. paying off a loan closes a line of credit, so that one less debt you’re successfully managing every month.
your credit score is basically a rating of how profitable you are for a lender to lend money to. people that take out lots of loans and maintain a credit card balance (or better, multiple credit card balances) >$0 generate much more profit for lenders, so they get a higher credit score
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