Paying off auto loan hurts credit score?
Date: Wed, 05/20/2009 - 23:34
I have a car loan payment. This, along with one credit card that I always pay every month, are the only debts in my credit report. Every month my credit score goes up a few points. Must be because I am building a good payment history with the car loan and credit card.
So what happens if I pay off the car loan now? how will it affect my credit score? I just ingerited some money and I want to pay off this bill but I am worried how it will affect my credit score! (I'm looking to buy a house soon()
Will it go UP because I paid off a debt or does it go DOWN because Im no longer building payment history?
So what happens if I pay off the car loan now? how will it affect my credit score? I just ingerited some money and I want to pay off this bill but I am worried how it will affect my credit score! (I'm looking to buy a house soon()
Will it go UP because I paid off a debt or does it go DOWN because Im no longer building payment history?
I don't think paying off the car loan will lower your score, but
I don't think paying off the car loan will lower your score, but it may stop your score from improving further. This is because your credit history, which contributes 35% in your score, will not improve if you pay it off.
As regards your credit card, if you pay it off, the "amount owed" factor, which contributes 30% in your FICO score will improve, which will help you to improve your score. After paying off the credit card debt, you may continue using the card to make purchases and repay it within the due date. This will help you to improve your credit history and therefore your credit score.
