Why did my credit score drop after paying extra toward principal?

Credit Discussions Forum
1

I recently made an extra payment toward my car loan principal, but my credit score dropped from 760 to 750. Here’s the situation:

  • I have a simple interest loan. When I make payments, I can choose to apply extra money toward the principal.
  • My monthly payment is $390, and my balance was $17,800. Last month, I paid $1,700 in total (regular payment + extra toward principal).
  • My credit score dropped 10 points after this payment.
  • The loan started at the end of July.
  • I’ve been making extra principal payments every month, and my score went up the previous month.

There are no negatives on my credit cards, and both are under 20% utilization. Why would my score drop this month after making extra payments?

2

A 10-point drop is insignificant. Credit scores often fluctuate by small amounts due to minor changes in utilization, account activity, or the credit scoring formula. It’s nothing to worry about.

3

This is like worrying that your fried rice has 10 fewer grains than last time. A 10-point change in your credit score is negligible and doesn’t matter in the grand scheme.

4

A 10-point difference doesn’t matter unless you’re about to take out a major loan. Keep paying your debts on time, and your score will be fine in the long run. Try not to overthink small changes.