My credit union loan officer said something that changed how I see my credit score

I was talking to a loan officer named Diane at my local credit union in Cleveland about why my score dropped 40 points after paying off a car loan early, and she said 'the system punishes you for finishing.' It hit different because she explained how closed accounts age off your history faster than open ones, and now I honestly don't know if paying off debt is even the right move anymore. Has anyone else run into this confusing catch-22 with their own reports?

2 comments

2 Comments

charles_baker282d ago

Isn't it funny how being responsible with debt feels like getting punished for finishing your vegetables? I guess I learned the hard way that good behavior doesn't always win you points.

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wells.christopher2d ago

Tbh I read this article from NPR a while back about how credit scoring systems actually penalize people who pay off their debts too fast. They said something like 30% of your score is based on utilization, and zero balance on everything can actually make you look riskier. Honestly it's a messed up system where the people who play it safe end up getting worse rates than the ones carrying a little debt. Ngl it feels like the whole thing is designed to keep you in that sweet spot of always owing something but never too much. That's probably why Dave Ramsey's advice to never carry a balance doesn't always work on paper even if it makes sense in real life.