Do you think my scores will drop?

[Anonymous]

I have paid my car payment down to $300. The remaining payment is not due until October. Do you think my scores will drop if I pay the remaining balance off now, rather than waiting? I will still have an installment loan on my credit because I have a student loan that I am paying on. My scores are currently 774, 787, and 794. I was recently pre-approved for a mortgage loan, but I am leaning towards waiting until November to purchase. I just want to know what kind of hit I can expect to take by paying off the loan either now or later.  

[haulingthescoreup]

I would have once said that the student loan would fill the installment loan category, but I'm beginning to see things that make me wonder if they are treated differently. I had two small student loans, and never got any feedback on them, when they were open or when I paid them off early. But when I got a car loan several months later, I got happy chirps on the things-you're-doing-right screen for having an installment loan. I've read posts by others with similar experiences.

If it won't kill you to keep it open, you might do better to do so. It certainly won't hurt your mortgage app, and with luck, if it does affect your scores, it won't have been updated by the time you go to close on the mortgage. Even if it does, I don't think there's a big ding.

How's that for a lot of vague nothing at all??? Sorry about that...

[Anonymous]

It's a strange one. Some people get a boost in score on last payment and some get a drop. I figure on most auto loans which are 5yr or less you probably won't see a change either way and might get a few points for closing it. Longer term installments like mortgages people have seen a drop after last payment.

From what I understand Student, Auto+other and Mortgage are all treated slightly differently. However since you still have at least 1 installment of any kind I don't believe you will get dinged for closing another.

[Anonymous]

Also remember that your FICO score, while important, isn't the sole arbiter or whether or not you get credit. A successfully paid loan, even if it does drop your FICO 10 to 15 points (and there's no guarantee it will), looks very good on a manual review of your credit file. And you retain the account and its positive history for ten years.

I wouldn't let FICO scoring considerations prevent you from retiring a loan early if at all possible.

[Anonymous]

Thanks for all the great advice. Not sure what I'm going to do, but everyone gave me a lot to think about.

[haulingthescoreup]

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@Anonymous wrote:

Thanks for all the great advice. Not sure what I'm going to do, but everyone gave me a lot to think about.

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Yes, we're very good at spreading confusion! Good luck