topic Re: Paying off one car loan in Understanding FICO® Scoring

Paying off one car loan

Anonymous — Fri, 23 Mar 2018 14:50:13 GMT

I have two car loans, one of which only has about $2k left on it. If I fully pay that one off, can I expect my score to drop? Or will the existence of the other loan prevent that?

Re: Paying off one car loan

Kree — Fri, 23 Mar 2018 15:07:30 GMT

It depends upon the exact balances left. Your installment loans score for an aggrigate utlization.

So if your second loan has high utilization, when this one is paid off, your total utilization goes up, and your score could come down a bit.

If your second loan as similarly low utilization, when this one is paid off, there should be no changes.

Re: Paying off one car loan

Anonymous — Fri, 23 Mar 2018 15:12:52 GMT

Ok thanks. Is 85% considered high utilization for installment debt?

Re: Paying off one car loan

Kree — Fri, 23 Mar 2018 15:56:57 GMT

I beleive installment loans have the same thresholds. 8.9% 28.9% 48.9% 88.9%

So if together your loans have you under 28.9% or 48.9%, then paying one off might decrease your score by a few points. Not sure about specifics, but I wouldn't expect more than 10. Someone else might have a better estimate.

Re: Paying off one car loan

Anonymous — Fri, 23 Mar 2018 18:43:07 GMT

Nice response by Kree. He can help you out better if you tell him the current balance and original loan amount for each loan. We can also give you the tools for how to figure it out on your own. It's pretty easy to do.