Pay off loan early?

Anonymous · ‎10-19-2015

Today I applied for a personal loan for $12k for 48 months to pay off back taxes. The interest rate kind of sucks (12.9%) and I'm pretty sure I will be able to pay it off within 6 months. Would paying it off that soon help my credit score or should I pay off a big chunk of it right away and then leave it open for a while before paying off the rest?

Anonymous · ‎10-19-2015

Everyone file are different, my question to you is are this loan is the only loan you have? do you have other personal loan or auto loan or mortage? IF you do have other loan then yes its good to pay it off, but i would recommend to pay if off after 12 months. Anything paid off loan or credit card that are close will be on your file for 10years. Even though the loan APR are high, but if you are building credit or re-building its best to keep it at least 12months in good standing before paying it off. Other member may advice you a differnt direction, but i would do this if I was you.

Just keep in mind that any paid off loan with cause a score drop, just like opening a new loan or credit card. But it will bounce back up soon.

Anonymous · ‎10-19-2015

I do have an auto loan although I'm the co-signer on it and my dad is the primary. (Because my credit was worse then than it is now). I also have a PLOC but for only $500. No Mortgage. The reason I'm taking out the loan is that the IRS denied my OIC but countered with a little over $12k so if that actually works out I can pay it off right away with this loan and get the 3 liens on my credit report deleted, not to mention have this nightmare of a tax problem resolved finally!

Anonymous · ‎10-19-2015

@Anonymous wrote:
I do have an auto loan although I'm the co-signer on it and my dad is the primary. (Because my credit was worse then than it is now). I also have a PLOC but for only $500. No Mortgage. The reason I'm taking out the loan is that the IRS denied my OIC but countered with a little over $12k so if that actually works out I can pay it off right away with this loan and get the 3 liens on my credit report deleted, not to mention have this nightmare of a tax problem resolved finally!

As long as you have an auto loan reporting there is no sense in keeping this one any longer than necessary. Pay it off as soon as you can.