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Are there any score benefits to paying more than the minimum on my car loan? I know I will pay less in interest over the life of the loan, and I will pay it off sooner, but right now I feel like the money is better spent paying of my revolving debt.
I'm one of the few lucky ones who has some spare money that I would like to use to start paying off as much as I can and building my score (I'd like to get a house in the next 12 months) So I'm trying to figure out if paying my auto loan of sooner will help (with the score part)
Thanks in advance for the help!
He's right. Paying down the balance on your revolving accounts will reduce your debt to credit ratio. Generally, you want below 30% utilitization on your revolving acounts. Anything over 50% looks pretty bad and 70% - 100% utilization is a big negative.
The flip side is that getting ahead on your car payments isn't even reported to the credit bureas so there's zero benefit to your score until the loan is finished. So, if your looking to buy a house, pay down your revolving accounts as soon as you can and your score will go up.
Pay off the revolving.........THEN tackle the car loan with the extra payments. This is KEY!
He's right. Paying down the balance on your revolving accounts will reduce your debt to credit ratio. Generally, you want below 30% utilitization on your revolving acounts. Anything over 50% looks pretty bad and 70% - 100% utilization is a big negative.
The flip side is that getting ahead on your car payments isn't even reported to the credit bureas so there's zero benefit to your score until the loan is finished. So, if your looking to buy a house, pay down your revolving accounts as soon as you can and your score will go up.