Does paying off a car build credit?
Once you pay off a car loan, you may actually see a small drop in your credit score. However, it's normally temporary if your credit history is in decent shape – it bounces back eventually. The reason your credit score takes a temporary hit in points is that you ended an active credit account. Why did my credit score drop when I paid off my car? Credit utilization — the portion of your credit limits that you are currently using — is a significant factor in credit scores.