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New Visitor
Posts: 2
Registered: ‎02-21-2013
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Payoff auto loan

[ Edited ]

Hi I need urgent suggestion. I'm planning to apply for mortagage loan in next 6 months. I have debt to income ratio issue because I had two auto loan in my acct.

i just paid off my two auto loan of 6k and 19k Yesterday and I don't have any credit card debt. Soon after pay off I realize that it will affect my fico score badly. Can you please suggest if it is going to hurt my score or not.

19k auto pay off loan is in process so I really can't see any changes in my score.

 

please suggest me urgently.

Epic Contributor
Posts: 24,695
Registered: ‎10-23-2007
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Re: Payoff auto loan


Neenu wrote:

Hi I need urgent suggestion. I'm planning to apply for mortagage loan in next 6 months. I have debt to income ratio issue because I had two auto loan in my acct.

i just paid off my two auto loan of 6k and 19k Yesterday and I don't have any credit card debt. Soon after pay off I realize that it will affect my fico score badly. Can you please suggest if it is going to hurt my score or not.

19k auto pay off loan is in process so I really can't see any changes in my score.

 

please suggest me urgently.


Why would paying debt off effect your Fico badely for buying a house??

Do you have credit cards at all?

no debt an use of a credit card in a small way would make score go up but if you are already applying for mortgages and they are telling you debt is the issue for approval then having the 2 loans paid off seems like what would be needed.

Fico Scores: EQ- 670., TU 705 Sync, EX 728 SoFi(05/04/15)
I'm just trying to catch up to RON1
88 Cards and Counting :smileytongue:
New Visitor
Posts: 2
Registered: ‎02-21-2013
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Re: Payoff auto loan

Yes I have 2 credit card with total 18k limit and I'm paying them on time.

i applIDE for pre approval and they said your DTI is very high. So they suggested to pay off your two car loan can qualufy you for loan.

 

this is just pre approval from builder fate before closing I will appl y for loan from other lander. So again not sure how my credit will be in inext 6 month after car pay off.

 

if my fiaco would be down then sure it will affect my interest rate .now fico is 719

Epic Contributor
Posts: 24,695
Registered: ‎10-23-2007
0

Re: Payoff auto loan


Neenu wrote:

Yes I have 2 credit card with total 18k limit and I'm paying them on time.

i applIDE for pre approval and they said your DTI is very high. So they suggested to pay off your two car loan can qualufy you for loan.

 

this is just pre approval from builder fate before closing I will appl y for loan from other lander. So again not sure how my credit will be in inext 6 month after car pay off.

 

if my fiaco would be down then sure it will affect my interest rate .now fico is 719


I assume they told you to pay the auto loans off because the only thing they care about with mortgage (okay, not ONLY thing) but if you have $250 payment on $6k auto and $450 on another that is a good chunk monthly in minimum payment vs. 4 credit cards at even higher debt might be under $200.

Financially though I think paying the Credit Cards would almost ALWAYS not only be better for score but also better financially.

Fico Scores: EQ- 670., TU 705 Sync, EX 728 SoFi(05/04/15)
I'm just trying to catch up to RON1
88 Cards and Counting :smileytongue:
New Contributor
Posts: 69
Registered: ‎01-24-2009
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Re: Payoff auto loan

[ Edited ]

Well I have heard, and can now confirm when the auto loan reports as '0' your score will drop. Paid off our auto loan last month. Reported yesterday and mine and my wifes scores dropped 9 and 7 points.

 

What I am wondering now is what effect the loan on the new vehicle will have when it hits our reports?

 

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