topic Re: Should I Payoff my NFCU SSL? in Personal Finance

Should I Payoff my NFCU SSL?

growthadvocate — Mon, 21 Mar 2022 04:51:30 GMT

In 08/2020 I took out a $20,000 SSL for a 60 month term. At the time I had a thinner file and didn't have any installment on my file. It was a text book play, and I got a great boost. Since then I took out a $25,000 personal loan on a 48 month term in 3/2021. These are the only 2 installment accounts that I have on my file.

My SSL has a balance of roughly $800. I make a very small payment each month, so that the account is active. The personal loan has a balance of approximately $20,000.

In an effort to optimize my scores and file, I have a few of questions.

**The primary question is, should I payoff the SSL, now that I have the other personal loan open...or keep it open?

*Does the overall utilization of open installment accounts combine? If so, I assume that closing out the SSL would hurt me.

*Does an account stop increasing your average age of account once it's closed? I've read heard arguments to both sides on this. Not sure what's true.

My AAoA isn't great. Equifax and Experian are both just shy of 2 years. Transunion is nearly 6 years, and my highest score of course. Scores currently range between mid to high 700's.

Any insight is greatly apprecaited!

Re: Should I Payoff my NFCU SSL?

OmarGB9 — Mon, 21 Mar 2022 05:45:40 GMT

Yes; whether closing the Navy SSL would hurt you depends on the current balance on the other installment loan.

Second question: NO. Closed accounts in good standing continue to contribute to age metrics.

Re: Should I Payoff my NFCU SSL?

growthadvocate — Mon, 21 Mar 2022 19:01:00 GMT

Thank you @OmarGB9

The LTV of the SSL is 4% and the LTV of the other loan (which would remain) is 80%. This is why I asked if the combined loan utilization is a metric worth considering. Combined the current total loan LTV is 46%. If I close the SSL, I go to the 80% LTV on open loan accounts.

Re: Should I Payoff my NFCU SSL?

SouthJamaica — Sat, 26 Mar 2022 12:04:37 GMT

@growthadvocate wrote:
In 08/2020 I took out a $20,000 SSL for a 60 month term. At the time I had a thinner file and didn't have any installment on my file. It was a text book play, and I got a great boost. Since then I took out a $25,000 personal loan on a 48 month term in 3/2021. These are the only 2 installment accounts that I have on my file.

My SSL has a balance of roughly $800. I make a very small payment each month, so that the account is active. The personal loan has a balance of approximately $20,000.

In an effort to optimize my scores and file, I have a few of questions.
**The primary question is, should I payoff the SSL, now that I have the other personal loan open...or keep it open?

No you should not pay it off until your personal loan is down to a balance of $2200.

*Does the overall utilization of open installment accounts combine?

Yes. In fact it is only the aggregate that counts in scoring.

If so, I assume that closing out the SSL would hurt me.

It might not hurt that much at the moment, because your aggregate is still well over 10%. But it wouldn't be good down the road.

*Does an account stop increasing your average age of account once it's closed?

No, it continues to be factored into your AAoA as long as it appears in your reports, which is typically for another 10 years after being closed.

I've read heard arguments to both sides on this.

There are no "arguments" on the other side. FICO counts closed accounts as long as they appear in your reports.

Not sure what's true.

What we tell you is true

My AAoA isn't great. Equifax and Experian are both just shy of 2 years. Transunion is nearly 6 years, and my highest score of course. Scores currently range between mid to high 700's.

Any insight is greatly apprecaited!