Paying off my 1 month old car loan

[Poquelin]

Greetings,

I bought a new car April of last year. I financed it the dealer. Last month I refinced the loan with my Credit Union. Last week I lost my job. I'm debating whether or not to pay off the car loan to reduce my monthly expenses. 

The question in this post is purely in terms of Credit Scores:

Will it help my score more to continue with the payments being that this loan is only 1 month old?

Or will my score be impacted just the same if I pay it off after just one month?  Which, if any will have the most positive impact on my score?

Thank you,

[Jamex]

It really depends on what else you have on your file currently, as well as how thick/old your credit file is generally. If you have a relatively thin file (less than 4 tradelines) and this is your only installment loan (all the rest are credit cards) then it might ding your score a bit since you'd no longer have a good "credit mix" which should include at least one installment loan. On the other hand, if you have other installments, OR if you just generally have a thick, old file (10+ tradelines, AAoA of 10+ years) then you might not notice an impact at all. If you're somewhere in between those two extremes, you might notice a slight dip. 

The other thing it depends on is how much you currently owe overall. If your overall debt was getting pretty high, then it might actually help to pay this off.

Credit scores take a ton of different factors into consideration, so the big question is how paying off this account will impact your particular file in terms of credit variety, depth, and overall debt load.

Hope that helps at least a bit, and good luck navigating the job transition.

[RushXTC]

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@Poquelin wrote:

Greetings,

I bought a new car April of last year. I financed it the dealer. Last month I refinced the loan with my Credit Union. Last week I lost my job. I'm debating whether or not to pay off the car loan to reduce my monthly expenses. 

The question in this post is purely in terms of Credit Scores:

Will it help my score more to continue with the payments being that this loan is only 1 month old?

Or will my score be impacted just the same if I pay it off after just one month?  Which, if any will have the most positive impact on my score?

Thank you,

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Since you lost your job, Can you safely continue paying it monthly without any risks? If so, Continue paying it monthly. It'll help your score more than paying it off.

Positive impact? Monthly payments.

[Poquelin]

Jamex and RushXTC,

Thank you!  I find your replies very helpful in helping decide what to do.

It looks like monthly payments it is. I have 5 revolving accounts (3 credit cards and 2 dept store cards) all less than 6% usage and all relatively new. The oldest is only 2 years old. I also have a mortgage ( also 1 month old) and my car loan. All this I got after Ch 7 BK discharged a little more than 2 years ago.

So it looks my file is pretty thin.

Since I feel that I can safely continue making the payments, I will.

Again, thank you for your opinions and advice!