When you pay off your car loan, several things can happen to your credit score. First, your credit utilization may drop, as the loan balance is reduced to zero. This can have a positive impact on your score, particularly if you had a high utilization rate.
Second, your credit mix may change. Paying off an installment loan could decrease the diversity of your credit portfolio, which may slightly lower your credit score. However, if you have other types of credit, such as credit cards or mortgages, the impact may be minimal.
Finally, your payment history will continue to be a significant factor. If you have made all your car loan payments on time, your positive payment history will remain on your credit report for up to ten years, positively influencing your credit score