Apply before or after current loan shows paid?

[nada9188]

I am going to apply for a loan at a cu. There is a loan on my credit that had an original balance of 16,900, which is now at 13000. It has been paid off, however I don't know if I should apply before it reports a $0 balance or apply while it is still open and just tell them it is paid.

Thank you

[pizzadude]

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@nada9188 wrote:
I am going to apply for a loan at a cu. There is a loan on my credit that had an original balance of 16,900, which is now at 13000. It has been paid off, however I don't know if I should apply before it reports a $0 balance or apply while it is still open and just tell them it is paid.

Thank you

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If it shows a balance on your credit reports then lenders will likely have to include it in your DTI calculation.   So if you are borderline with qualifying based on your income and debt then you might want to wait until it reports as paid.   If not then you should be fine to proceed now.

[nada9188]

Well, all of my cc's are reporting a $0 balance. So the only debt I have is a $335 monthly car payment. There are no other expenses going out. So basically my other question was will my credit take a hit if the account shows closed with a $0 balance?

[pizzadude]

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@nada9188 wrote:
Well, all of my cc's are reporting a $0 balance. So the only debt I have is a $335 monthly car payment. There are no other expenses going out. So basically my other question was will my credit take a hit if the account shows closed with a $0 balance?

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If it is an installment loan then no, there shouldn't be much change at all ~ installment utilization is a negligible component of FICO scoring compared with revolving utilization.

[webhopper]

Wait until it shows paid so that the payment on that old loan doesn't affect your DTI in getting the new loan.  

[nada9188]

I will wait. Paid it off 1 month ago and it still shows the balance. Is it a good thing that my credit cards are paid to 0?

[pizzadude]

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@nada9188 wrote:
I will wait. Paid it off 1 month ago and it still shows the balance. Is it a good thing that my credit cards are paid to 0?

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Yes, it is good from a DTI perspective;  from a FICO perspective, you might see a slight score bump if you let a very small balance ( less than 9% ) report on one of your CC accounts, while all the others report a zero balance.