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Paying off a Car loan. Good or Bad????

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Anonymous
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Paying off a Car loan. Good or Bad????

Hey all I  am rather new to the forum and I am in desperate need for some advice. See I was a victim of identity theft a number of years back (really long story) and not I am left with the mess of cleaning it up. My current scores are Experian 655, TransUnion 599, and Equifax 594, so my question is this I have a car loan (approx. $6k) that I can pay off later this month but everything I read is horror stories about how peoples credit dropped after they paid off a car loan. Does anyone have any experience with this type of situation or can shed some light on it, it would be greatly appreciated. Thanks!

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Anonymous
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Re: Paying off a Car loan. Good or Bad????

You'll have a positive debt that shows paid in full on you report for the next 10 years and you'll have one less debt to worry about. FICO scoring is a strange beast and you may see a slight dip in scores initially, but it should rebound quickly. I'd say go for it. Just don't get yourself in more trouble by replacing that paid off debt with something else (new car note, credit card debt) since you're "used to" making monthly payments anyways.

Message 2 of 5
Anonymous
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Re: Paying off a Car loan. Good or Bad????

It CAN ding your score if you have no other installment loans. I would get a small $500 secured loan from a CU, stretch it out 3 years or so, set it up to auto-pay from the loan procedds, and THEN pay off the auto loan. You really only need to have one installment loan to show a good credit mix, and the amount does not matter.

Message 3 of 5
Anonymous
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Re: Paying off a Car loan. Good or Bad????

I am co-applcant on my wife's car so that will still report as installment payments and then I also have a secured Credit Card ($500 max with a $0 balance) and then this summer I opened up a "credit builder loan" at my local credit union so that will show installment payments as well.

Message 4 of 5
Anonymous
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Re: Paying off a Car loan. Good or Bad????

Sounds like you're good then.

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