Will paying off car loan help or hurt?

[Anonymous]

I am cosigner on DH car loan. I recently got an offer for a special refinance rate from our local CU. It's a little lower than our current rate, and the lower payment would improve our DTI which I am trying to lower to make refinancing our house an option. However, the CU told me they don't take the highest score into account, they take both scores into account. So if we refinanced, I may have to do it in only my name to get the lower rate. This would mean that DH wouldn't have any open car loans on his credit report. He would have 2 closed car loans both in perfect standing. Will this negatively affect his score (because of credit mix), positively affect it (because paid off early), or indifferent?

[haulingthescoreup]

If it's the only open installment loan (including mortage, I think), he could lose points. It varies widely by agency. But there's nothing special about an auto loan vs a student loan vs a personal loan. Just installment.

It's definitely possible to have excellent scores without any open installment credit, but I know you're trying to help him get his scores up, so that's just in answer to your question.

[Anonymous]

Thanks, Hauling! Man, I cannot wait til 2012 when we can just make sensible, economical decisions, and I don't have to worry about balancing out our scores anymore

[haulingthescoreup]

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@Anonymous wrote:

Thanks, Hauling! Man, I cannot wait til 2012 when we can just make sensible, economical decisions, and I don't have to worry about balancing out our scores anymore

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  I hear ya.

I figure by the time I get to that point, I'll be using my CCs for fancy at-home medical beds and cans of Ensure.

You're awfully close though! *

eta: close to not needing to fiddle with scores, not to the medical beds and Ensure. yikes