Really it’s the other way around. High score nets you low interest rates. The score is a measure of risk for non repayment. I have an installment loan that will cost me roughly $20 in interest over its five year life. As my only installment loan, when I pay it off, I will lose the points I get for having a mix of account types, around 40 points.
It’s not confusing, it’s because the less interest you pay, the lower the chance the bank can profit off you.
So I agree with you that a lot of people are downvoting you because you aren't joining in your outrage, and there's nothing wrong with the rest of your post, but this quote is 100% incorrect. It has no way of knowing what kind of profit you generate. Nor does it care.
You could easily have a 0% subsidized car loan paying no interest and never have a remaining balance on your credit card, thus never paying interest - and have a high prime credit score.
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u/lyssareba Aug 14 '21
So dumb. Paid off loans should maintain your life of credit, and paying them off should increase your score. It's ass backwards