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I will soon be finishing paying off my car loan (yay!). This will be paid off with what is a normal monthly payment, not a large sum I'm throwing at the loan, so stretching the loan out longer (if I wanted to) isn't an option.

I have a credit card as well, which I've had for about two years. This credit card and the soon paid off car loan are the only lines of credit I have.

My credit score is really good right now and I would love to maintain it. I don't forsee needing to get a loan/mortgage any time in the next few years, but I would still like to maintain the credit score.

I think getting another credit card (which I plan on paying off every month and only using a fraction of the maximum credit) will help me in the long run to maintain my credit score, but I am not sure. Will it? What else can I do to maintain my credit score after paying off the car loan?

If there is another question on this site already that answers my question, feel free to point me that way.

I live in the USA.

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    Don't let the tail wag the dog. Normal commerce is enough to maintain a Quite High Enough score.
    – keshlam
    Jul 12, 2016 at 1:00
  • @keshlam, I'm sure what you said answers my question, but I can't figure out what the answer is.
    – NeutronStar
    Jul 12, 2016 at 1:02
  • Paying off your car lian will not affect your credit rating enough to worry about, and may not even be negative.
    – keshlam
    Jul 12, 2016 at 1:05
  • But in the long term, only having a credit card instead of a credit card and a loan, won't that lead to a decreased credit score?
    – NeutronStar
    Jul 12, 2016 at 1:08
  • Not significantly. I've never had a car loan and generally only carried one credit card , yet my credit score was excellent. (Past tense only because I finally bought house last year. My credit score is still excellent.)
    – keshlam
    Jul 12, 2016 at 1:12

1 Answer 1

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Congratulations on paying off your car loan. Reducing your debt is good for your finances, no matter what happens to your score.

It is important to remember that a credit score is just a number, and part of the purpose of the score is to scare you into taking out more debt than you need.

A high credit score can be useful for some things, but there is a point at which you don't get any additional benefit for raising your score.

You haven't told us your score, but you describe it as excellent. Luckily, since you aren't in immediate need of a good credit score, you can wait and see what happens. Pay off your loan, and see if your score drops. If it does drop a little, ask yourself if you will actually see any benefit by taking on additional debt in an attempt to raise it. Remember that simply paying off the credit card that you currently have each month will nudge your score up as time goes on.

If at that point, however, you feel that you must continue to play the game and go for the high score, you can follow the conventional wisdom and add additional credit cards to your life, lowering your utilization number and increasing your total available credit. If you are going to do this, I would encourage you to ensure that you aren't paying any interest or fees just to try to raise your score.

Just remember, even if you attain the high score, it is the credit card companies that win, not necessarily you. There is nothing inherently wrong with having a high credit score, but in my opinion, it is not a great measure of financial health.

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    +1. People seem, to me, to be far too focused on the credit score. Seems better to focus on net worth and net cash flow instead. (Higher net worth is obviously better than lower net worth. Increasing your monthly financial surplus gives more money to save or invest, which if done right leads to a higher net worth.) If your costs go up and you can see no valid reason for that other than that you just reduced your debt, it's usually worth calling the bank, insurance company or whatever and ask why they consider you a higher risk customer than they did a few months ago. Negotiation!
    – user
    Jul 13, 2016 at 9:40

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