What should I expect if I pay off my car loan?? Help please!

[yaya2486]

Hi All,

I'm trying really hard to build my credit and increase my credit score so I can eventually qualify for a mortgage loan and buy a home with my husband.  So I've been working to tackle off all my credit card/loan balances first, to wipe those off my credit report so I can just start saving for a good down payment. 

I have a credit union auto loan that is under my husband's name and my name, with a remaining balance of $758.00 left. I have been making extra payments towards it, and was planning to pay this entire auto loan balance off this week!!

If I do this, will me paying off this auto loan balance help my credit score go up? Or will it not make any difference?

My current Equifax FICO Score 8 is 589. 

I'd really appreciate your input. I'm still really new at this so if you have any advice on what I can do to fix my credit and to prepare for applying for a mortgage loan-- I would really really appreciate it!

Thanks!

[ladybug2016]

Hi yaya,

Is that your only Installment Loan? 

I'm pretty sure if you pay it in full, it will hurt you as you won't have an Installment Loan reporting.

Others will reply that can tell you for sure! 

Good luck with getting yourself ready for a Mortgage! 

[Anonymous]

I have read on here from a few users that paying off an installment loan with no other installment loans on file can hurt your score. I have also heard from others you could also do a share secured loan through a CU to soften the score blow that you would take from paying off the vehicle loan. I have seen many people recommend Alliant CU for their share secured/credit builder loan to keep an installment loan on file also because they only charge 3% Apr and pay you 1% on your share deposit you pay to get the loan.

[Anonymous]

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@yaya2486 wrote:

Hi All,

I'm trying really hard to build my credit and increase my credit score so I can eventually qualify for a mortgage loan and buy a home with my husband.  So I've been working to tackle off all my credit card/loan balances first, to wipe those off my credit report so I can just start saving for a good down payment. 

I have a credit union auto loan that is under my husband's name and my name, with a remaining balance of $758.00 left. I have been making extra payments towards it, and was planning to pay this entire auto loan balance off this week!!

If I do this, will me paying off this auto loan balance help my credit score go up? Or will it not make any difference?

My current Equifax FICO Score 8 is 589. 

I'd really appreciate your input. I'm still really new at this so if you have any advice on what I can do to fix my credit and to prepare for applying for a mortgage loan-- I would really really appreciate it!

Thanks!

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I paid off my mortgage in April and in May my scores went DOWN 30 points. FICO does not like paid off debt.

[gdale6]

If this is your only open installment loan you typically will see a decrease in Fico 8 scores when its paid off.

[Sbrooks1]

Agree with gdale