Getting a loan and paying it off after it reports?

[omgtain]

Hi all!

So I'm 19 and trying to build a good credit history, my oldest account is Capital One Quicksilver, It is 1.5 years old, but my AAoA is only 9 months.

I also have Discover IT, CareCredit, Barclays and Amex, only 10% util and I plan on gardening these guys for now.

I've been reading that now that I have a good amount of revolving credit cards, what I need is different types of credit. I've got a trust fund (and a job), so I don't have any student loans to pay for, but I will be in the market for a new car in about a year or so.. I want to avoid paying a lot of interest and have the money availble to buy with cash, so would it be okay to get a car loan and have it report, then pay off the whole thing ?

Would it also be acceptable to take out a loan for.. say.. $500 or $1000, then pay it off after a month ?

My score according to CK is 740, Discover says 736. Thanks.

[user5387]

If you open an installment loan, there is a hit to your scores in the areas of new inquiry, new tradeline, and reduced AAoA.

There's also a benefit in the mix of credit types area, but that benefit is not real big, and you lose at least some of the benefit once the loan is closed.

[RobertEG]

+1

Hits on new account, possible hard pull, and lowering of AAoA make it questionable.

The tweak might be if the loan you take out and pay is an auto as opposed to a personal loan.

If/when you app for a future auto loan, the score would be an auto-enhanced version, not a general consumer score.

Having of record a prior auto loan might improve your auto-enhanced score.

Personally, I follow the "if you dont need the credit, dont get it" mantra.

[takeshi74]

Types is 10%

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

and, for reasons stated above, the bump would probably be much less.  History is 35% and just takes time.  Utilization is 30%.  Focus on those and prepare to be in this for the long haul.

[JediNeo]

I was in a similar position last year. Although I had the funds purchase a car in cash I decided to apply to financing. Toyota approved me at 4% for 60 months. Bought the car in Feb and paid it off in Sept.

I choose this route as I wanted to strengthen my credit file. At the time I only had two cards to my name. Now I have a paid auto loan on my file that will show until 2023.