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im not aware of it benefiting your credit score to pay it off. however, the interest rate is a bit high so id want to expedite paying off the loan.
I paid off a car loan about six months early and my credit score went down. Its pretty high right now, so I didn't care a lot. However, the stated reason was that by paying off the loan that "I closed an account".
Not, what I expected. However, not all reasons for raising and lowering credit scores make much sense.
I paid off a car loan about six months early and my credit score went down. Its pretty high right now, so I didn't care a lot. However, the stated reason was that by paying off the loan that "I closed an account".
Not, what I expected. However, not all reasons for raising and lowering credit scores make much sense.
Completely closing an account will cause a short term drop in your credit score. You've already reaped the benefits of your payment history.
Paying off installment loans of any sort (personal, student, mortgage, auto, etc....) doesn't give the huge bang for buck credit score wise many assume.
Installment loans are factored differently than revolving credit. In fact having a mix of debt that includes such borrowing can actually boost one's credit score.
Main issue lies with installment loans aren't like revolving credit. You already borrowed a certain sum, and interest is baked into the cake. All that remains is making on time payments until the total amount is paid off. There isn't any "utilization" to speak off because again you've borrowed a fixed amount.
All things considered it is usually best to pay down credit card debt, and or once balances reach zero to not carry a balance, while making on time payments to installment loans.
Primary reason for paying off any installment loan is to get it over with, and thus save on interest. But this only works if lender does not have pre-payment penalties, and or there is a way to get additional money towards principal only. The latter should lower amount subject to interest and thus save some money. But again you have to do the sums.
Main reason many pay off installment loans early (besides saving interest) is to get their monthly debt to income ratio down. This comes into play say when looking to buy real estate and total monthly nut to service debt is calculated against income.
My FICO score from my credit union is 808.
One factor keeping it that low is the lack of an installment loan.
As far as I can tell, getting a car loan would raise my score.
LOL
Thanks everyone, yes I have a credit card, and a business credit card (I'm here in the US on an investor's visa and the more I spend here the better my chances of visa renewal are so I spend a LOT - last years biz expenses were over $250,000, mostly on a card).
I hope you're utilizing some kind of rewards credit card to maximize the credit card spending
I tried to sign for my grandson's car and was turned down. Bank said that their is no record of me ever borrowing money - I'm 74 and own 3 homes, 2 cars, and have enough money to pay cash for whatever car I want. My credit card gets paid off every month, and my "credit score" is 775-ish.
Not the OP issue but maybe you're turned down because of your age. Were you trying to CO-sign for HIS loan? or would it have been YOUR loan?
Either way, you're 74 -- and of course could have 20 more years to live... BUT if you we're co-signing for a very young person who has no credit history, and YOU croak -- the bank would have only a limited amount of time to make a claim against your estate, would it need to. What business would want that hassle?
Again, I don't know why you were turned down, I'm just wondering.....
Age/income/job etc. are reasons people are told make purchases and get loans before retiring.
Check your credit utilization, if it's too high that negatively impacts your score. Ideally keep utilization below 20%, so ask for more credit if you need to lower utilization.
This is the key. Especially if you already have a good credit rating. You want to keep your debt to income ratio low, believe it or not have huge amounts of unused credit. When I got a credit card with a $30k balance that I rarely use, my credit rating shot up to around 830 or so. Like others , it boosts my ego, but does t really serve me otherwise.
Paying off installment loans of any sort (personal, student, mortgage, auto, etc....) doesn't give the huge bang for buck credit score wise many assume.
Installment loans are factored differently than revolving credit. In fact having a mix of debt that includes such borrowing can actually boost one's credit score.
Main issue lies with installment loans aren't like revolving credit. You already borrowed a certain sum, and interest is baked into the cake. All that remains is making on time payments until the total amount is paid off. There isn't any "utilization" to speak off because again you've borrowed a fixed amount.
All things considered it is usually best to pay down credit card debt, and or once balances reach zero to not carry a balance, while making on time payments to installment loans.
Primary reason for paying off any installment loan is to get it over with, and thus save on interest. But this only works if lender does not have pre-payment penalties, and or there is a way to get additional money towards principal only. The latter should lower amount subject to interest and thus save some money. But again you have to do the sums.
Main reason many pay off installment loans early (besides saving interest) is to get their monthly debt to income ratio down. This comes into play say when looking to buy real estate and total monthly nut to service debt is calculated against income.
all the free credit scores from the credit cards are actually bank card scores not comprehensive credit scores ..they pretty much weight credit card use very heavily and discount everything else
....
I tried to sign for my grandson's car and was turned down. Bank said that their is no record of me ever borrowing money - I'm 74 and own 3 homes, 2 cars, and have enough money to pay cash for whatever car I want. My credit card gets paid off every month, and my "credit score" is 775-ish.
Makes me laugh at the irony. Technically you are such a bad credit risk that you are “forced” to pay cash for everything.
We older folk weren’t exposed so simply to credit cards when we were younger. Especially women were not expected to deserve, want, or need their own credit. That changed about 1970 when everyone started getting offers for cards. But if you established good financial habits before then you may never have gone after that kind of credit. And you are probably better off than most because of that. Not that credit cards don’t have their place.
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