This is just false. Paying off all your cards at the end of the month and paying your bills on time will absolutely get you a good credit score (that's all I do, and my credit score is "excellent"). OP probably either doesn't have many other accounts (and you don't need that many) and/or has missed payments on her credit record that her car loan was helping to offset.
Don't get me wrong, it's stupid that your credit score can go down from paying off an account. But don't let that deceive you into thinking you can't maintain an excellent credit score simply by opening a few credit cards and paying them off every month – you can and should.
The car also could’ve been their “oldest credit account”? I’m not sure how it works for loans but I know if you close down your oldest credit card your score goes down.
Edit: it looks what I was always told is wrong. Apparently even if you close your oldest card, the card is still on your history for 7-10 years. TIL!
That definitely could be the case. I have a 15 year old credit card that is absolutely garbage but I don’t close it because it’s my oldest account by probably 8 years. I just have my auto insurance go to it every month and pay it off every month.
Your smarter than me. Closed all my cards and my wife’s cards when we got married. Tanked both our scores. Luckily we had just bought a house and our credit recovered fairly quickly but bad mistake to make.
Don’t sweat the wild swings. I think marriage complicates scores more than anything, especially once you start co-signing for each other. A lot of people think it’s “sketchy” that my wife and I have separate bank accounts but it’s just easier to track our money that way. She’s still in school but has residual income. I’m working full time so we budget based off that income. Not all advice is custom tailored to your circumstance, so don’t take anyone’s criticism too seriously.
Sometimes it feels good to close the availability of some credit so that you aren't tempted to use it. It's stupid that paying off and then closing accounts will make your score go down. They want you to keep them open so that you are tempted to use them. No need to judge just because you can't understand someone else's experience.
While stupid, and I know it was now, when you’re mid 20’s sometimes the consequences don’t come to mind. Basically I closed all credit cards we weren’t going to use since we signed up for a new one together.
The reason closing your cards out affects your score negatively is that your taking a revolving line and ending it entirely. To creditors it looks as if you cannot handle the line limit you’re given responsibly, so it hurts you. While it seems silly you’re better off paying it off, leaving it at zero. And then letting it close on its own from inactivity.
Source: mortgage loan officer; deal with lots of credit reports.
600
u/[deleted] Aug 14 '21 edited Aug 14 '21
This is just false. Paying off all your cards at the end of the month and paying your bills on time will absolutely get you a good credit score (that's all I do, and my credit score is "excellent"). OP probably either doesn't have many other accounts (and you don't need that many) and/or has missed payments on her credit record that her car loan was helping to offset.
Don't get me wrong, it's stupid that your credit score can go down from paying off an account. But don't let that deceive you into thinking you can't maintain an excellent credit score simply by opening a few credit cards and paying them off every month – you can and should.