If I sell my car and lease another, will it affect my credit ?

[Anonymous]

I currently am making payments on my car. If I sell the car and pay off the loan, and turn around and lease another car....will this affect my credit ? I plan on purchasing a home in 6 months and want to really improve my score. Thanks N

[fused]

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firstinlastout wrote:
I currently am making payments on my car. If I sell the car and pay off the loan, and turn around and lease another car....will this affect my credit ? I plan on purchasing a home in 6 months and want to really improve my score. Thanks N

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Yes this will hurt your scores and here's why.

- paying off an open installment loan and having it closed, even if paid as agreed, might lower your scores. FICO scoring likes to see at least one open installment in good standing and it helps to diversify your credit mix.

- leasing a car, much like buying a car, requires lenders or auto dealers to pull your credit. These inquiries will ding your scores some

- any new account will re-age your credit files and shorten the average-age of your accounts and this too lowers scores.

It's not a good idea to go apping if you are looking at a big purchase in 6 months. I would wait until after you close on your hose.

[sunrise]

I think fused means after you close on your HOUSE...not your HOSE!!

[fused]

Ha! Funny!

[Anonymous]

How about if you sell one car and buy a new one, thus having a new installment loan that replaced the other one? I recently sold a car after 11 months of the installment loan and had it paid in full. And purchased a new replacement car with a new installment loan. I plan to buy a home in about 9 months. Also, the old car loan ended up being sold to another financing company so it was categorized as a CFL, but the new car loan is categorized as a normal car installment loan. Am I in trouble now?

[fused]

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1111mel wrote:
How about if you sell one car and buy a new one, thus having a new installment loan that replaced the other one? I recently sold a car after 11 months of the installment loan and had it paid in full. And purchased a new replacement car with a new installment loan. I plan to buy a home in about 9 months. Also, the old car loan ended up being sold to another financing company so it was categorized as a CFL, but the new car loan is categorized as a normal car installment loan. Am I in trouble now?

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Where are your FICO scores at? Your situation is similar to the OP's only your time frame is 9 months.

[Anonymous]

Fused: My Credit Scores at time of purchase were 751, 762 and 771

[Anonymous]

thanks guys....I will go ahead and wait then until after the home purchase.

[fused]

Scoring alone, you are in very good shape. As for other underwriting criteria, I'll leave that to those who are knowledgeable about mortgages.