If a car is totaled in an accident and the insurance pays off the car will the payoff reflect on owners credit

Question

So, will the paid off car be seen as a paid off car on your credit score?

So, will the paid off car be seen as a "paid off" car on your credit score?
So, will it increase your credit score any?

Answer 1

Yes, if the lienholder is paid off and you were the signer on the loan, the loan will be reflected as paid on your credit report. There is no distinction made on the credit report as to how the payment was paid - it would reflect the same whether you paid it, the insurance company paid it, or your rich uncle paid it off for you.

How much positive effect this will have on your overall score is a much more complex question - it depends on how much total credit you have, current other balances outstanding, length of time you've had credit, how recently you've applied for other credit, etc.

Generally, though, it'll be a positive item that will contribute toward a higher score.

Answer 2

Anytime you have a line of credit and it shows a 0 balance that's a plus. It doesn't matter who or why the loan was paid off...it's a paid off loan. What you should be concerned with is will the credit bureau update your records upon receipt of the information from your lender.

Answer 3

It would report as a zero balance auto loan on the credit file.