09-05-2012 10:43 AM
I currently have a car loan that I owe about $3000 on (out of $19000). I am going to trade my car in for a newer one soon and will be financing about $12,000. Will this lower my credit score? I was hoping to refinance my home in December but won't be able to if my credit score drops.
09-05-2012 11:12 AM
Switching the balances around likely won't do much, if at all. You will very see a ding due to the new account reporting and possibly due to any drop in AAoA. IME, new accounts cost 20-25 pts with most/all of the points returning within 6-12 months as the new account ding goes away.
If I had that, I'd throw extra money at the car balance then refi the home in December. If the balance is low enough (or paid off), then your lender will ignore the payments from DTI calcs if soon-to-be-paid off and that will look better for your credit (not score...score likely won't change even if paid off).