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New Member
kleiner
Posts: 3
Registered: ‎03-05-2007
0

Installment Credit Payoffs

I had some bad credit in the past. It is currently getting better. I am selling a house an plan to use some of it to payoff a mortgage and a car loan. When you read about your FICO score it always just talks about reducing your credit card debt which I really have none. My current Fico Score is 720 and I haven't had a late payment in 6 years. I will make all my debt go away, but the FICO simulator doesn't take in effect installments paid off fast. For example I paid an extra $4000 on an car payment that monthly only requires $436 and I have been doubling that for a couple months and I didn't even get a point boost on my fico score. I will payoff $39000 of debt next month and I hope my score moves a great deal; but as I stated this is mostly installment debtnot revolving credit. I really want to get my FICO 760 points if at all possible before I purchase another house, tenatively next year. Anyone have any wisdom besides just time?
Moderator Emeritus
LadyFICO
Posts: 273
Registered: ‎04-13-2007
0

Re: Installment Credit Payoffs

sounds like your lacking a blend on your credit report. Do you have any cc? If no you should shop for a good one for you and your situation this is a good time because you are a year out. Also paying the bills off and aging your accountsw will add some more. I know, but with fico patience really is key!
New Member
kleiner
Posts: 3
Registered: ‎03-05-2007
0

Re: Installment Credit Payoffs

I have 4 credit cards Master Card with a 14000 limit,Visa with a $6000, Discover Card with a $5000 limit and a Military Star Card with $7500 limit. My total debt on this cards is $1350 which is less then 5% of my max credit. I will pay that off with the house and the car next month.
Moderator Emeritus
LadyFICO
Posts: 273
Registered: ‎04-13-2007
0

Re: Installment Credit Payoffs

Well your util is good and your blend sounds good. You already have good scores to get a good int rate on anything you try to obtain. I believe from reading these forums that once you get past 700 the boosts are not as common. Also, not using cc as much can possibly hurt. At this point unless you become negligent I don't think you have anything to worry about. You should be advising us! :smileytongue: I would hate for you to try to do something drastic before you make your major purchase and ding your credit. Being ahead of the game is a good position to be in, you are planning a year out and you pay everything on time. I believe you can still gain some points before next year by doing what your doing!
Valued Member
Erik
Posts: 31
Registered: ‎03-19-2007
0

Re: Installment Credit Payoffs

If the rate on the car loan is low you might be better off to making the payments and investing the excess somewhere else where you can get a higher rate of return. That way you'll have an emergency account for the time being and that much more for a downpayment when it comes time to buy the new house. I don't think that paying off the auto loan early is going to give your score much of a bump (somebody chime in if I'm wrong).
Valued Contributor
TheNewWorldMan
Posts: 2,374
Registered: ‎03-15-2007
0

Re: Installment Credit Payoffs



kleiner wrote:
I had some bad credit in the past. It is currently getting better. I am selling a house an plan to use some of it to payoff a mortgage and a car loan. When you read about your FICO score it always just talks about reducing your credit card debt which I really have none. My current Fico Score is 720 and I haven't had a late payment in 6 years. I will make all my debt go away, but the FICO simulator doesn't take in effect installments paid off fast.





Psst...you're going to be just fine.

Your score will naturally increase. And if you take a close look at the interest vs. FICO tables in ScoreWatch, you'll see that the curve of interest rates versus FICO for mortgages starts to go asymptotic around 700. Going from a FICO of 600 to 700 drops your interest rate from 8.5 to 6.1, a gain of 2.4. Going from 700 to 850 drops it from 6.1 to 5.8, a paltry 0.3. So you're already into the flattened part of the curve. Relax. Pay on time and reduce your debt load on general principles.
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