How long to reap the benefits of auto loan ?

[Anonymous]

I recently bought a car and financed $ 44,000 on it.... despite a credit score in the mid 700's, I was a little worried about getting the loan considering I have had a company car for the past 20 years, hence have not purchased a car and thought my fico auto score would be low, but the loan was approved quickly.  

My question.... how long before your credit score see's an improvement ?   6 months or a year ?   I think it will probably jump down right after the loan, albeit I haven't checked it yet.... but then as on-time payments are made, maybe start sliding back-up and then some.....

How much of some of you with successful auto loans seen your credit score improve as you pay it off ?  (Examples ?)

Thanks !  Just trying to educate myself for what happens for the period after the loan.

[marty56]

I would not expect any score benefit in paying down the autoloan other than payment history and lower DTI.  The loan will add to your mix and help your AAoA as long as it stays on your CR, closed or not.

[pizzadude]

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@marty56 wrote:

I would not expect any score benefit in paying down the autoloan other than payment history and lower DTI.  The loan will add to your mix and help your AAoA as long as it stays on your CR, closed or not.

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+1.   Installment loan utilization is a very minor part of FICO scoring compared to revolving utilization, so you aren't likely to see your score improve as your balance decreases.    IMO it makes sense, otherwise people with very long term loans....like 30 year mortgages...would have a score hit for a very long period of time.

[Anonymous]

I haven't mentioned Utilization.... the question is, as you demonstrate your ability to make your payments on-time after a sizeable loan such as this..... does your credit improve ? 

Or perhaps I can ask this question in a different way.... To the people who have previously taken a loan out, as time went and you made on-time payments, what did your credit score do ?   After how much time did whatever change it had start to take place ?

[mschang]

since loans are for multiple years, so much can happen that it's hard to pinpoint how many points are specifically due to on-time payments. from what i've read here, points from on-time payments are incremental and would take >6 months to really make any impact on your score. even then, at your point level, you wouldn't gain as many points as someone on my level would.

[marty56]

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@Anonymous wrote:

I haven't mentioned Utilization.... the question is, as you demonstrate your ability to make your payments on-time after a sizeable loan such as this..... does your credit improve ? 

Or perhaps I can ask this question in a different way.... To the people who have previously taken a loan out, as time went and you made on-time payments, what did your credit score do ?   After how much time did whatever change it had start to take place ?

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Beyond DTI and %util for CC balances, loan amounts have no effect on your FICO score.  IMHO lenders don't care on MR if you had a Pinto or a Rolls as an autoloan.

[TilltedBrim]

I'm no credit guru but based on what I've been able to pick up on these forums is that: You're new auto loan is  going to help you after six months by reporting an established tradeline with a good payment history.  Secondly, it will help you in the future as this will give you a histroy of having an auto loan that establishes your auto fico.  As someone mentioned above... You're new installment loan on your vehicle wont have as a significant impact on your FICO score as a new revolving trade line after six months.  But in the end you have the car that you want and another established trade line with a good payment history.  The impact on your scores may be minimal with your scores already being in the mid 7's unless this is your only installment loan which may provide a boost because of the credit mix.  Hope this helps....