Why does credit score drop after paying off a loan?
In: Other
Some of the factors the scoring model looks at are number and variety of accounts, average age of account. So if a 5 year long car loan drops off your account because you’ve paid it off, it may reduce your average account age, as well as dropping the number and types of loans.
Typically, the score will regain some of those points initially lost when account gets closed/removed from your report over the next few months.
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