The way that credit works is unfortunately confusing. Once you understand how and why, you should be able to predict its changes. In your instance, paying off that loan hurt you. Credit scoring looks for use of credit and good use of it. By having no debt, you're showing no credit usage. Yes, your credit history remains for some time and has some affect on your score but mostly it comes from current and the short term. Scoring looks at your total accounts and time you've had those accounts and your account mix (personal loans, student loans, mortgage, autoloans, credit cards). If your total accounts went from 1 to 0, you can see that's a problem because now it appears you have no credit. And maybe you had a 6 year timeframe on that autoloan well that means when you made that last payment you had 6 years of active credit history. Once its closed out you go to ZERO. Again, the algorithm has no choice but to lower your score. Next your account mix. Its poor if all you have is an autoloan and when that closes, you have 0 types of credit. So yes it tends to look at what you have now but if you've had bankruptcy or missed payments, that haunts you for a long time. If you cant get a walmart cc then you need to go to any bank and get a secured credit card. You have to put up collateral (a few 100 bucks cash) to protect the bank. Then just use it for cash or groceries and keep it paid off. Your score will slowly rise because you have an active account. Never close it. It's not easy. You have to keep at it.
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