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How long until a new installment account makes a positive impact on your score?

New Member

How long until a new installment account makes a positive impact on your score?

my credit scores are 533, 622, 643. I just got a new auto loan yesterday. I know my score will drop a little from opening a new account. But wanted to know how long it takes until it increase my scores from what they are now. Also I wanted to know if I pay the loan off in 6 months what impact will it have. Thanks

3 REPLIES
Moderator Emeritus

Re: How long until a new installment account makes a positive impact on your score?


needamortgage wrote:

my credit scores are 533, 622, 643. I just got a new auto loan yesterday. I know my score will drop a little from opening a new account. But wanted to know how long it takes until it increase my scores from what they are now. Also I wanted to know if I pay the loan off in 6 months what impact will it have. Thanks


I saw in your other post that you want a mortgage. Give yourself at least a year between this auto purchase and the mortgage app.

 

The new car loan will likely drop your scores. That new account ding will fade over time and within 6-12 months you'll be back to par. You wouldn't likely gain any points from the new car loan and won't see any improvement for adding it, regardless of when you pay it off. However, it possible that at some point in time this will become on of your oldest accounts as your older ones start disappearing due to age and it's when this account becomes older than your AAoA you'll see some benefit with the age.

New Member

Re: How long until a new installment account makes a positive impact on your score?

Thanks. Go RG3

Valued Contributor

Re: How long until a new installment account makes a positive impact on your score?

Technically you do not have to wait a year after any purchase as long as you still qualify.

Installment loans are not a very big boost in scores.
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