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Regular Contributor
Posts: 217
Registered: ‎11-01-2007
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Installment Loans vs Credit Mix?

I am making the last payment tomorrow on my Motorcycle that I refi'ed with NFCU close to 4 years ago. I also have two other small installment loans that currently run into August(last payments due in Aug for both).

 

I have the ability to pay off the two smaller loans over the next three months. If what I remember about credit mix is true, I believe that my credit score might be hurt a bit if I do not have any open TL's in the installment category, so I'm wondering would my scor ebe best served if I contiue to make timely payments on both until August, or would I be best served to pay them off early?

 

I want to app for a car loan with NFCU in mid-May and I'm wondering which route to take to maximize my score come May.

 

Any input is appreciated! :smileyhappy:

EQUIFAX - 640 1/05/12 - Goal of 720 by Mid May!
Transunion - 637 - 01/15/10
Moderator
Posts: 15,659
Registered: ‎07-14-2009
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Re: Installment Loans vs Credit Mix?


Lucid08 wrote:

I am making the last payment tomorrow on my Motorcycle that I refi'ed with NFCU close to 4 years ago. I also have two other small installment loans that currently run into August(last payments due in Aug for both).

 

I have the ability to pay off the two smaller loans over the next three months. If what I remember about credit mix is true, I believe that my credit score might be hurt a bit if I do not have any open TL's in the installment category, so I'm wondering would my scor ebe best served if I contiue to make timely payments on both until August, or would I be best served to pay them off early?

 

I want to app for a car loan with NFCU in mid-May and I'm wondering which route to take to maximize my score come May.

 

Any input is appreciated! :smileyhappy:


The key word is "might". Yes credit mix is a small part (10%) of your credit score but in my opinion being debt free always trumps any other consideration.

 

Even closed accounts are counted into your credit mix although not weighed as heavily as open, active accounts.

 

 

 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Regular Contributor
Posts: 217
Registered: ‎11-01-2007
0

Re: Installment Loans vs Credit Mix?


MarineVietVet wrote:

Lucid08 wrote:

I am making the last payment tomorrow on my Motorcycle that I refi'ed with NFCU close to 4 years ago. I also have two other small installment loans that currently run into August(last payments due in Aug for both).

 

I have the ability to pay off the two smaller loans over the next three months. If what I remember about credit mix is true, I believe that my credit score might be hurt a bit if I do not have any open TL's in the installment category, so I'm wondering would my scor ebe best served if I contiue to make timely payments on both until August, or would I be best served to pay them off early?

 

I want to app for a car loan with NFCU in mid-May and I'm wondering which route to take to maximize my score come May.

 

Any input is appreciated! :smileyhappy:


The key word is "might". Yes credit mix is a small part (10%) of your credit score but in my opinion being debt free always trumps any other consideration.

 

Even closed accounts are counted into your credit mix although not weighed as heavily as open, active accounts.

 

 

 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

 


Thanks MarineVietVet!

 

Just wanted to add that this isnt an issue with DTI, as my DTI is currently hovering at around 24% -with- the Motorcycle loan, and will drop to around 17% once I make the last payment tomorrow(today now). I'm just trying to be extra careful not to screw anything up, hence the question about the installment loans. So just to make sure I'm understanding this correctly, any score drop from not having an active installment TL would be offset by what exactly?

 

Also: Thank you for your service!

10-year Navy Veteran here.. :smileyhappy:

EQUIFAX - 640 1/05/12 - Goal of 720 by Mid May!
Transunion - 637 - 01/15/10
Moderator
Posts: 15,659
Registered: ‎07-14-2009
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Re: Installment Loans vs Credit Mix?


Lucid08 wrote:
 

Thanks MarineVietVet!

 

Just wanted to add that this isnt an issue with DTI, as my DTI is currently hovering at around 24% -with- the Motorcycle loan, and will drop to around 17% once I make the last payment tomorrow(today now). I'm just trying to be extra careful not to screw anything up, hence the question about the installment loans. So just to make sure I'm understanding this correctly, any score drop from not having an active installment TL would be offset by what exactly?

 

Also: Thank you for your service!

10-year Navy Veteran here.. :smileyhappy:


There might not be any score drop. If there is it will be probably (no one can guess for sure) just a few points. And this is offset by having less debt. Always make having less or no debt your #1 priority.

 

And I forgive you for being a Squid!!!   :smileywink:  Just kidding. Thank you for your service.

 

 

 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Frequent Contributor
Posts: 315
Registered: ‎05-28-2011
0

Re: Installment Loans vs Credit Mix?


MarineVietVet wrote:

Lucid08 wrote:
 

Thanks MarineVietVet!

 

Just wanted to add that this isnt an issue with DTI, as my DTI is currently hovering at around 24% -with- the Motorcycle loan, and will drop to around 17% once I make the last payment tomorrow(today now). I'm just trying to be extra careful not to screw anything up, hence the question about the installment loans. So just to make sure I'm understanding this correctly, any score drop from not having an active installment TL would be offset by what exactly?

 

Also: Thank you for your service!

10-year Navy Veteran here.. :smileyhappy:


There might not be any score drop. If there is it will be probably (no one can guess for sure) just a few points. And this is offset by having less debt. Always make having less or no debt your #1 priority.

 

And I forgive you for being a Squid!!!   :smileywink:  Just kidding. Thank you for your service.

 

 

 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".


+1

TU Auto enhanced FICO (9/2012): 744
EX FICO (8/2012): 748
EX FICO (6/2010): 739
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