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New Contributor
Posts: 55
Registered: ‎11-25-2011
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Auto Loan | Reporting Schedule?

I just put $20,000 on my auto loan to pay it off entirely. This payment (cashiers check) was submitted to the credit union's branch office on 12/17. However, my normal payment schedule is on the 1st of every month. So, two questions...


  1. Does auto loan reporting work the same way as a credit card would? In other words, will I need to wait a few days after January 1st for the change to show?
  2. How is this change likely to affect my credit score? From my understanding, it won't do much for my score, but it will help me get a mortgage loan next month (proof that a car payment won't take away from my income). Is this a correct assessment?

One other quick note: the car loan is only 7 months old, so in theory, I guess paying it off could potentially negate the negative effect that a "new account" has on your score? Since that new account is no longer in question.



Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: Auto Loan | Reporting Schedule?

1) yes, it takes a few days for the lender to report the account closed and show the balance paid in full.

2) paying off the auto loan will help in getting a mortgage as your debt to income ratio is lower. However because it is now a closed account and you have no other auto loans reporting, you will lose diversification and your score will probably drop some initially.

Do you have other open trade lines reporting? This is important for your credit score to go up. Also be sure you are not hovering around the minimum score requirement for the mortgage as a drop in score from the closed auto loan could hinder pre approval for the mortgage.
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