- by C.C.
Paying off an installment loan
Did paying off your loan hurt your score? You’re not alone. Paying off a loan can temporarily lower your credit score, according to credit bureau Experian. The temporary dip is caused by the way lenders view active vs. paid off loans.
Making regular, timely payments on an active loan shows lenders you can handle credit properly. However, when the loan is paid off, this effect diminishes, causing your score to dip temporarily. It should be back up after a couple of months. The paid off loan will stay on your credit report, bolstering your score in the long run.