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courthousedoc
Posts: 4
Registered: ‎07-20-2007
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How Will Paying Off CC vs. Installment Loans Affect Score?

I've just found this forum and I think it's great.  I'm going to have a good time this weekend trying to read everything.
 
Hopefully some of the wise people may be able to answer a question.  I've been slowing improving my score for over a year -- last year it was 588, now its 673.   However, now I'm going to be coming into a bit of money and was wondering how to pay off debts to improve score.  I've got one revolving account at 19% so that goes without doubt.  However, I have an installment loan at 14.75% from my CU and a CC from the same CU at 11.9%, both with about the same balance.  Should paying off one have a priority over paying off another as far as my score is concerned?  Instead of paying off one, would it be better to split the money 50/50 to each?  Also, if I do get even more money than anticipated, the next loans to payoff are all installments at about the same rates.  Again, is paying down one account $1000 better than paying down two accounts by $500 each?
 
Any help/thoughts/insights would be greatly appreciated.
 
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

Generally, paying off credit cards will improve score more. I would need to know if any of your loans are Consumer Finance or just personal, auto ect because personal and auto, student... loans are not weighted very heavy to bring your score down.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
New Member
courthousedoc
Posts: 4
Registered: ‎07-20-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

Thank you very much.  I appreicate the response.  The outstanding loans are student loans and car loans.  I'm guessing from your response that it really doesn't have a big impact on my score if I pay one down all the way versus paying two down 50%.  Is that right?
 
Again, thanks so much for your response
Moderator Emeritus
fused
Posts: 16,378
Registered: ‎03-12-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

[ Edited ]


courthousedoc wrote:
I've just found this forum and I think it's great.  I'm going to have a good time this weekend trying to read everything.
 
Hopefully some of the wise people may be able to answer a question.  I've been slowing improving my score for over a year -- last year it was 588, now its 673.   However, now I'm going to be coming into a bit of money and was wondering how to pay off debts to improve score.  I've got one revolving account at 19% so that goes without doubt.  However, I have an installment loan at 14.75% from my CU and a CC from the same CU at 11.9%, both with about the same balance.  Should paying off one have a priority over paying off another as far as my score is concerned?  Instead of paying off one, would it be better to split the money 50/50 to each?  Also, if I do get even more money than anticipated, the next loans to payoff are all installments at about the same rates.  Again, is paying down one account $1000 better than paying down two accounts by $500 each?
 
Any help/thoughts/insights would be greatly appreciated.
 


As far as scores are concerned, pay down the CC first. 1-9% util of your total CL for max FICO points. Any money left over can be used to pay down the installment loan but don't expect much improvement with your scores, this is just a matter of paying less interest and saving money. Just remember high installment balances hardly affect your scores, what's important is paying on time whereas with CC's (and other revolving accounts) it's both, paying on time and keeping util low, again 1-9% util is ideal.


Message Edited by fused111 on 07-20-2007 08:17 AM
Credit Profile -
FICO 08 Scores (09-16-2014): EQ 824, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1 (Amex 07-15-2014)

New Member
courthousedoc
Posts: 4
Registered: ‎07-20-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

Thanks a lot.  I really appreciate the info.
Member
powerup
Posts: 47
Registered: ‎07-18-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

I would pay the CC first. Then, work on the installment loans save the students loans for last.
Mega Contributor
RobertEG
Posts: 17,828
Registered: ‎03-19-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

Agreeing with all that has been said, I also offer the fact that paying off an installment loan takes it out of your "type credit" category. Could cost 10-20 pts.  With installment loans gone, you will take a hit in the 85 pt credit mix category, which will be much greater than eliminating the loan.  If FICO gain is your goal, keep it in the mix.  Pay off revolving accounts, and take advantage of the history of payments on the ACTIVE installment loan. 
Moderator Emeritus
fused
Posts: 16,378
Registered: ‎03-12-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?



RobertEG wrote:
Agreeing with all that has been said, I also offer the fact that paying off an installment loan takes it out of your "type credit" category. Could cost 10-20 pts.  With installment loans gone, you will take a hit in the 85 pt credit mix category, which will be much greater than eliminating the loan.  If FICO gain is your goal, keep it in the mix.  Pay off revolving accounts, and take advantage of the history of payments on the ACTIVE installment loan. 


The installment loan doesn't disappear beacuse it's PIF. After it's PIF, usually this type of TL's status will change and become closed and age on your reports for up to 10 years. Best if there is nothing derogatory reporting on this type of TL such as lates. Again closed and open TLs are weighted and scored equaly, doesn't matter if they are revolving or installment. I have never heard of an installment loan PIF early hurting anyones FICO scores.
Credit Profile -
FICO 08 Scores (09-16-2014): EQ 824, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1 (Amex 07-15-2014)

Established Contributor
Posts: 739
Registered: ‎06-30-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?

since installment loans don't figure into revolving Util  moving CC debt  would free up util.
People say "Only apply for credit you NEED"

I say "apply for credit you have PRATICAL use of"

I don't have AMEX card because I don't want a card that suffers from PMS
Moderator Emeritus
fused
Posts: 16,378
Registered: ‎03-12-2007
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Re: How Will Paying Off CC vs. Installment Loans Affect Score?



rbbyrbsn wrote:
since installment loans don't figure into revolving Util  moving CC debt  would free up util.


Exactly!
Credit Profile -
FICO 08 Scores (09-16-2014): EQ 824, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1 (Amex 07-15-2014)


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