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Contributor
jorgevazquez87
Posts: 81
Registered: ‎12-26-2012
0

To Pay or not to Pay in Full a Personal Loan this month?

Hi everyone!

 

I currently pay a loan for the amount of 3,000 dollars. The loan was given on march 2012 by a credit union and the purpose was for credit history. I have perfect payments and this week I have the capacity to pay in full. Right now I own a mortgage, walmart store card and the loan, 'm wondering if paying in full the loan would benefit me somehow. I pulled yesterday my annual credit report and there are no baddies, collections, etc and my current TU FICO Score is 707 (I don't know eq and exp never bought the scores)

I plan on buying a car at the end of this year or maybe on 2014, there's no hurry at the moment.

 

My question is: Is this a good move for me? Would benefit me and my credit history/score?

 

Thanks in advance!

 

 

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Senior Contributor
myjourney
Posts: 25,492
Registered: ‎02-07-2013
0

Re: To Pay or not to Pay in Full a Personal Loan this month?

I can only speak for myself but i've found that paying off a loan early usually results in an increase in scores not to mention your saving interest on the loan. 

On your CR usually it will reflex as payed early

Hope this helps you:smileywink:


jorgevazquez87 wrote:

Hi everyone!

 

I currently pay a loan for the amount of 3,000 dollars. The loan was given on march 2012 by a credit union and the purpose was for credit history. I have perfect payments and this week I have the capacity to pay in full. Right now I own a mortgage, walmart store card and the loan, 'm wondering if paying in full the loan would benefit me somehow. I pulled yesterday my annual credit report and there are no baddies, collections, etc and my current TU FICO Score is 707 (I don't know eq and exp never bought the scores)

I plan on buying a car at the end of this year or maybe on 2014, there's no hurry at the moment.

 

My question is: Is this a good move for me? Would benefit me and my credit history/score?

 

Thanks in advance!

 

 




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guiness56
Posts: 22,408
Registered: ‎01-17-2008
0

Re: To Pay or not to Pay in Full a Personal Loan this month?

If it is your only installment loan your score could suffer if you pay it off and close it.  Only open, active installment loans count in credit mix.  Closed will still count in AAoA.

 

Installment loans play very little in FICO scoring but it is a YMMV thing.  Some have seen bumps when paid, others decreases.

Valued Contributor
boomhower
Posts: 1,863
Registered: ‎09-20-2011
0

Re: To Pay or not to Pay in Full a Personal Loan this month?

The overall effect is minimal in the grand scheme but the longer you run it out the more it will help you auto enhanced FICO.  They are more heavily slanted towards installment history than the plain jain FICO. 

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webhopper
Posts: 7,230
Registered: ‎09-16-2011
0

Re: To Pay or not to Pay in Full a Personal Loan this month?

Is the interest rate low? If the rate is above 5%.. consider paying it off.

Otherwise I agree with boomhower that you could continue the payments until the loan is paid off.

I actually would pay it off if I were in your shoes. You met your goal with the loan; done its job so kick it to the curb. I like paying off installment loans early; that's just how I roll.

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Contributor
jorgevazquez87
Posts: 81
Registered: ‎12-26-2012
0

Re: To Pay or not to Pay in Full a Personal Loan this month?

So in other words, do you suggest to pay in full this loan then take another one to have a installment active?

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