Re: Paying off car/credit score
11-21-2012 08:46 AM
I was in a wreck that was not my fault a few months ago and still owed about $2500 on my vehicle that was considered a total loss. The other person's insurance picked up the tab but my credit score has not budged in those months since.
I talked to a loan officer at my local credit union shortly after the accident about an auto loan and he advised that I wait until the insurance paid the balance of the vehicle off before applying for another loan. He said this would help in their (credit union) eyes that it is not a debt that I am paying on and it would help my DTI ratio. I waited, and applied for $30,000 and was approved.
Not sure if any of that helped or not but that's my story.
Did you have other installment debt reporting? If so, you wouldn't expect to see much of a score difference because it wouldn't affect your credit mix and while it would affect utilization, installment utilization carries so little weight that it can be ignored.
OP, I can't answer how much of a score difference you'd see. It is going to depend on a lot of factors. What is your score now? Any negatives on the limited items you have on your report? In any event, as this is the only installment loan you have, you might see some change when it is paid off as opposed to those who have other installment debt reporting.
Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13), TU 98 728 (01/06/12), TU 04 728 (lender pull) (01/12/12), EX 742 (lender pull) (01/12/12)
Goal Score: 720
Take the FICO Fitness Challenge