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New Contributor
c3troop
Posts: 65
Registered: ‎09-28-2011
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paying off car loan. will score raise?

I am about to pay off my four year car loan in a little under 2 years. After it is paid off will I see an increase in my fico score or a decrease because it'll be another a closed account
Frequent Contributor
Dadaluma83
Posts: 364
Registered: ‎08-23-2011
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Re: paying off car loan. will score raise?

Closed accounts still count for your score as much as open accounts.

 

Your score should improve a little since your installment utilization would be down.

 

In any case do what makes the most financial sense. Paying off a loan early, assuming there is no catch like a prepayment penalty or anything like that, will save you money in interest so that should be what you go for regardless of effect on a score.

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
Moderator Emeritus
MarineVietVet
Posts: 14,145
Registered: ‎07-14-2009
0

Re: paying off car loan. will score raise?


Dadaluma83 wrote:

Closed accounts still count for your score as much as open accounts. Closed accounts still count as part of your credit mix but open, active accounts are weighed more heavily.

 

Your score should improve a little since your installment utilization would be down. Installment loan utilization is looked at a part of your score but is such as small part it can virtually be ignored. I wouldn't expect any score difference when this is paid off. As always YMMV (Your Mileage May Vary).  

 

In any case do what makes the most financial sense. Paying off a loan early, assuming there is no catch like a prepayment penalty or anything like that, will save you money in interest so that should be what you go for regardless of effect on a score. I agree that paying off debt is always a good thing and should be the #1 priority with consideration of a score a very distant #2.


 

Frequent Contributor
cassembler
Posts: 470
Registered: ‎02-07-2011
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Re: paying off car loan. will score raise?

+1 to above; pay it off just to have less debt.

 

If you're paying off over the next two years, then you should expect the only score increase to be the result of a longer AAoA, and not because of the installment util and/or installment being closed v.s open. I paid off a $3500 note in one month and got zero FICO movement.

"Credit is purely a cash flow tool. Thinking of credit as extra money you didn't have before makes it an EXPENSIVE cash flow tool."
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alwaysaliberal
Posts: 3
Registered: ‎01-29-2012
0

Re: paying off car loan. will score raise?

My score stayed exactly the same, as did my spouse's. But, like PPs say, it saved us money to pay them off early, so we did. 


Starting Score: TU FICO: 684 12/30/12, EXP FAKO: 698 12/8/12,
Current Score: TU FICO: 693, EXP FAKO: 727, EQ FAKO 723
Goal Score: 800 across the board


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New Visitor
smileyred
Posts: 1
Registered: ‎01-03-2011
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Re: paying off car loan. will score raise?

When I paid off my car, my score dropped pretty significantly ~15 points. I would still recommend paying it off though. It's a great feeling :smileyhappy:

New Visitor
mnc46
Posts: 1
Registered: ‎07-30-2012
0

Re: paying off car loan. will score raise?

I like to lease car and rent a house.

 

Valued Member
R_W_
Posts: 33
Registered: ‎05-10-2010
0

Re: paying off car loan. will score raise?

I recently paid my car loan off early and my myFICO DROPPED 75 Points.... still can't figure out why... it was only myFICO and only the Equifax version... everyone else went up a few points....for whatever it is worth


Starting Score: EQ 740, EX 792 (lender pull), TU 772 (lender pull)
Current Score: EQ 767, EX 792 (lender pull), TU 772 (lender pull)
Goal Score: 2 over 760 and one over 800--still looking to get one over 800!


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Regular Contributor
cd2004
Posts: 147
Registered: ‎07-19-2010
0

Re: paying off car loan. will score raise?

My score dropped 1pt when I paid off a car loan that was about 12 months old

Starting scores Jan 2011: EQ: 510(fico) TU:521(fico) EX?
June 2014 scores EQ08:683 TU08:667 EX:651(amex)
Goal: 700's

in my wallet:BarclayMR $7k/CareCredit $7k/DiscoverIT $6k/Ashley furn. $5k/Springstone $5k/Kanes furn $3.5k/Walmart $2.7k/Cap 1 Plat.$ 2.5k/JCP $2.5k/Chase freedom $1.7k/TJX $1.7k/Cap 1 cash $1.5k/Amex delta $1k/Victoria $950/Paypal $800
Established Member
tudorjason
Posts: 17
Registered: ‎04-15-2008
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Re: paying off car loan. will score raise?

[ Edited ]

Finish paying off an installment loan won't increase your score; it's paying it and having less debt overtime that will raise your score.


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