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Frequent Contributor
Slab
Posts: 283
Registered: ‎12-16-2011
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Paying off installment early

[ Edited ]

I have two installment loans that are both 11 months old. One is for my vehicle which is about $21,000 remaining. The other is for a travel trailer with $16,000 remaining. I have a buyer for the travel trailer so, it would show as a closed account after selling. In addition I have 7 credit cards with a 2% combined usage but, on only one of the cards. Right now my debt to credit ratio for installments is 87% and my total Debt to credit ratio including credit cards is 53%. If I sell the travel trailer, my debt to credit ratio for installments will be 83% and my total debt to credit ratio including credit cards will be 37%. Will my credit score fall because I have one less installment or, will it rise due to having a lower total debt to credit ratio?

 

Thanks for any help.

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Elcid89
Posts: 567
Registered: ‎10-04-2012
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Re: Paying off installment early

It should rise.

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StartingOver10
Posts: 4,221
Registered: ‎03-06-2010
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Re: Paying off installment early

[ Edited ]

Slab wrote:

I have two installment loans that are both 11 months old. One is for my vehicle which is about $21,000 remaining. The other is for a travel trailer with $16,000 remaining. I have a buyer for the travel trailer so, it would show as a closed account after selling. In addition I have 7 credit cards with a 2% balance of available credit on only one of the cards. Right now my debt to credit ratio for installments is 87% and my total Debt to credit ratio including credit cards is 53%. If I sell the travel trailer, my debt to credit ratio for installments will be 83% and my total debt to credit ratio including credit cards will be 37%. Will my credit score fall because I have one less installment or, will it rise due to having a lower total debt to credit ratio?

 

Thanks for any help.


I bolded the part that is a little confusing to me. Do you mean that on one of your credit cards you have used 98% of the credit limit?

 

If so, than if you pay that one down significantly you will see an increase in your score. Those balances over 80% of your credit limit are really killing your score. I agree that paying off one of the installment loans is a great idea financially as it eliminates that debt and you already have another installment loan. Your score will get a bigger boost by paying down the revolving credit card debt. Remember the scoring algorithm measures not only your total debt against your total credit limits, It measures each individual card utilization too. That's why having all your cards report zero except one at less than 9% of your balance optimizes your score.

Frequent Contributor
Slab
Posts: 283
Registered: ‎12-16-2011
0

Re: Paying off installment early

[ Edited ]

I figured that I would mess up somewhere but reread it twice and didn't catch that error. I should have said 2% usage on one card. Thanks for pointing that out. I will edit.

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810 goal on all three by 3-1-2015

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