Pay off. Help or hurt?

[Anonymous]

My dh has two auto installment loans one is an atv but shows as auto. We will be paying off this truck loan and all of his credit card debt so everything should be st zero. But he will still have the atv loan on there so my question will this hurt our scores ? Once the credit cards are paid if I will also be closing credit one because it has an af and I will be closing gander because the stores are out of business anyways and it's just another store card Good move ? Okay thank you!!!

[rmduhon]

Don't let all the credit cards report a zero balance. That will hurt your scores. Let 1 report a balance of less than 9% of that card's limit. You want to have one instalment loan reporting if possible. Does he have another instalment loan reporting?

[Anonymous]

Yeah after we pay off the truck he will have the atv installment loan still active

[SouthJamaica]

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@Anonymous wrote:
My dh has two auto installment loans one is an atv but shows as auto. We will be paying off this truck loan and all of his credit card debt so everything should be st zero. But he will still have the atv loan on there so my question will this hurt our scores ? Once the credit cards are paid if I will also be closing credit one because it has an af and I will be closing gander because the stores are out of business anyways and it's just another store card Good move ? Okay thank you!!!

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For score optimization...

1. your overall installment loan utilization percentage should be 9% or less but not zero

2. all but one of your credit cards should report zero, with one card reporting a balance of 29% or less

[rmduhon]

@SouthJamaica 29%?

[Anonymous]

Yup, SouthJ is right.  Any particular card only needs an individual utilization of < 29%.  It's the total utilization that needs to be < 9%.

[Anonymous]

To piggyback on SouthJ's excellent advice....

* Our OP should strongly consider NOT paying off the truck loan, but rather paying it down (while still keeping it open).  If the husband pays it off entirely, it may hurt his score (depends on how much of the ATV loan is paid off).  We can explain how and why the loan payoff could hurt, if the OP wants to know.

A sound move would be for our OP to talk to the lender managing the truck loan and ask them whether they permit "pre-payment."  For some lenders, you can pay off a huge chunk of the debt, and then they will push the next payment's due date way into the future.  That way you get the advantage of keeping the loan open but paying almost no interest on it.

*  The DH  plans to close two credit cards, but I don't see whether the OP tells us the total number of credit cards that the DH currently has, nor whether the store card is the one of the oldest cards.  If the store card is not one of the older cards and if the DH has several cards total now, then closing the two cards is fine.

*  As everyone advises, our OP should keep one card reporting a small balance.  The DH can and should pay the balance in full each month after the statement prints.

[Anonymous]

@creditguyindixie. Thank you for your help I so appreciate this. So we only owe 2500 on his truck loan and the Atv loan is 7000 original balance 8,778.00. So it says we have paid off 18% of that current loan. So would it be okay if I paid off the truck in full?

As far as credit cards go out total ult was at 48%. I will be bringing that down to 19% and eventually down to 9% when I can but I don't have enough to get all the way to 9 % yet. In your opinion. If I have a card that has a high interest but is below 30% ult and I have another card that is interest free but is at 50% ult. What should I do if I can't pay BOTH off right now ?

[Anonymous]

Here's my advice right now:

(1)  Make sure you have paid all credit cards down to < 49% (considering each credit limits by itself).

(2)  Going forward make sure to pay substantially more than the minimum payment on all cards every month (even the 0% card).

(3)  Now focus on paying down your high interest credit card(s).  Goal should be to pay them off.  While you do this, your 0% card will slowly be coming down.  Goal should be to get it paid off before the 0% promotion ends.

Note: During 1-3 you were steadily making the required payments on your loans.  After all CC debt is paid off continue to use one card but always pay it in full after the statement prints, and keep its reported utilization < 29% of its credit limit.

(4)  Now begin paying down the loans.  Focus first on the one with the highest interest.  But do not pay either loan off.  Pay the loan balances down but not to $0.  When both loans are at under 9% of what they originally were, you should figure out which loan can be kep open the longest, and pay the other loan off.

(5)  When both loans are paid off (assuming you have no new loans) you should implement something called the Share Secure Loan Technique.

The 5-step plan above focuses on saving you money and gradually improving your score.  (By the end your score will be in great shape as far as loans and credit cards.)

PS.  You can begin step 4 still having a fair amount of debt on the 0% card, but closely monitor it so that the card gets paid off before the 0% promotion ends.