topic Re: Question about paying off/closing installment loan in Understanding FICO® Scoring

Question about paying off/closing installment loan

Jutz — Sun, 23 Sep 2012 15:34:39 GMT

Hello all,

I generally spend my time in "Rebuilding Credit" so that should tell you where my current status is.

I have an unsecured loan with a co-signer that I opened two years ago to help pay off a car I was upside down on, as well as purchase another cheap car. I have 4k left on it, pay 185/mo. It is my only installment loan and has impeccable payment history. I've been working on my credit for the past 8 months or so, paying things off, working other strategies, and I'm finally in a position where I can attack this loan.

My question: I am probably able to pay this off in the next 4 months. What are the implications of this? It is my only active installment loan outside of student loans, but I believe those count different in the credit mix? Because it has such good payment history and continues to be paid perfectly, is this also positively influencing my score to the point I might be slowed in my progress if I pay it off early?

Edit: To add, there are 26 months left on the loan, interest rate is 13.24%

Re: Question about paying off/closing installment loan

Shogun — Mon, 24 Sep 2012 01:18:10 GMT

Pay it off. Account will still show positive for another 10 years. Get rid of the interest payments.

Re: Question about paying off/closing installment loan

bettercreditguy1 — Mon, 24 Sep 2012 01:31:06 GMT

If you have the ability, pay it off early. On top of saving interest, it will look very good on your credit report being paid off several months in advance. It may not increase your score tht much, ymmv. Congrats, quite a milestone!

Re: Question about paying off/closing installment loan

Jutz — Mon, 24 Sep 2012 02:15:53 GMT

So this won't negatively affect my credit mix? I won't be signing a new installment loan until I get a new car, which I won't be getting until I can get a half way decent interest rate.

Thanks by the way. Happy to have gotten the hard part out of the way, now we wait...