06-13-2013 09:33 AM
I am buying a 17K car and i have enough to pay it off. My credit score is around 780 and I can get a loan for around 1.5%. If I take the loan and pay it off, will that help improve my credit score to get to the 800 mark? I have only had credit card balances which I pay off every month and never had a mortgage or credit card payment. Thanks!
06-13-2013 10:02 AM
Per FICO, I doubt that adding a car note would increase your FICO to 800. Conversely, I would bet a drop in FICO due to the new account with much of the damage disappearing within a few months-year.
There are several posters on here who hit 800 with no loans and only CCs. I hit 777 on my EQ FICO with only CCs, though I had a closed loan reporting at the time come think of it.
Are your CCs reporting $0?
06-13-2013 10:49 AM
Thanks for the reply. The last I checked my my full credit score i was zeroed out. My basic credit score has remained dormant these last 2 years according to the backend of my credit union portal. I want to buy a condo within the next few years and I was thinking that after the car was paid off, It would help my credit score go up. I have never had a installment payment before. So you dont think it is worth getting the loan?
06-13-2013 10:58 AM
I think you'd lose points if you got a loan. Maybe as it aged years down the road it'll be helping by then, but not 2, IMO. Now I'd get it if I needed it, but I wouldn't do it for FICO.
For max results on revolving credit, don't let all of your CCs report $0. Let one report a small balance. Oddly enough, all $0 balances can hurt your FICO. Ideally you'd want one to report a balance of under 9% of the CL and the rest at $0.
06-13-2013 11:04 AM
Thanks for the advice. I was only going to get the loan for the FICO score. I am shocked that keeping a balance on a credit card actually helps your credit score. I will have to look into it.
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.>> About myFICO