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Paying off auto loan will increase your FICO score?

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Anonymous
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Paying off auto loan will increase your FICO score?

Hi,

 

I have an auto loan balance of $10,000 and I want to pay it off and hoping that my FICO score will get higher.

How many points will it increases and how long will it taked to see the increase? My current TU=807 and EQ=787 as of 07/29/2009.

 

Thanks!

Message 1 of 4
3 REPLIES 3
Watchmann
Valued Contributor

Re: Paying off auto loan will increase your FICO score?

With your scores you should be looking to see what makes the most financial sense and not what the effect on your FICO score will be.  Boosting your score will do nothing for you.  It's only for bragging rights, and really, no one else really cares.  It won't make any difference if your FICO score goes up.  Do the math and make your decision on what puts the most $$ in your pocket.
Message 2 of 4
Anonymous
Not applicable

Re: Paying off auto loan will increase your FICO score?

Wathchman,

 

Thanks for the ideas! I think I will put the money in my pocket. Besides the interest on the car loan is only 2.9% and it will be paying off in July of 2010, which only a year from now.

Message 3 of 4
Anonymous
Not applicable

Re: Paying off auto loan will increase your FICO score?


@Anonymous wrote:

Wathchman,

 

Thanks for the ideas! I think I will put the money in my pocket. Besides the interest on the car loan is only 2.9% and it will be paying off in July of 2010, which only a year from now.


 

Do you make 2.9% on your savings rate?

 

If you have adequate cash reserves, AND are receiving less than a 2.9% return on your money, then I would pay the car off because you will "make money" from the difference in the interest on loan vs. interest on savings.

 

If you don't have adequate cash reserves (6 months living/expenses), then don't pay the car off, because you need to have that cash cushion.

 

 

 

Message 4 of 4
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