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Advise please

Djmike
New Visitor

Advise please

Looking for advise on 2 car loans. My credit history is slim. I have the money to pay one of the cars off or lower the amount on both. I want to built credit for a house about 3 years from now. Should i keep paying for 2 or pay one off? 

Message 1 of 5
4 REPLIES 4
Yasselife
Frequent Contributor

Re: Advise please

@Djmike If you want to build credit, secured/unsecured credit card is the way, you could add a mix with a secured loan like Self lender, but in my opinion it isn't necessary. 3 yrs is plenty of time to have a solid ground/established credit. Fico considers a new account as established on the 24 months mark. Store cards are easier to get. Capital One is rebuild friendly and Discover is new profile friendly. (Secured Discover would be my take because it graduates after(usually) a year.

hope that helps.



Message 2 of 5
Brian_Earl_Spilner
Community Leader
Mega Contributor

Re: Advise please

Really depends on utilization. If one is at 10% and the other is 90, paying off the 10 will make your aggregate utilization jump from 50% to 90%, which would be bad. That being said, you only need one installment loan to fulfill credit mix.




Message 3 of 5
Loquat
Moderator

Re: Advise please

Unless you're borrowing money at 0% then I'd pay one off the vehicles off if I had the funds to do so. More specially, the one with the highest interest rate. You'll continue to build credit with the other auto loan and credit lines that you have.

In my opinion, there's no reason to pay interest on anything when you don't have to.
Message 4 of 5
Kforce
Valued Contributor

Re: Advise please


@Loquat wrote:
Unless you're borrowing money at 0% then I'd pay one off the vehicles off if I had the funds to do so. More specially, the one with the highest interest rate. You'll continue to build credit with the other auto loan and credit lines that you have.

In my opinion, there's no reason to pay interest on anything when you don't have to.

If the goal is saving money, any funds you have should go to the higher interest loan.

If scores are the most concern, one loan with very small balance is better than two.

If you have no credit cards, and house is 3 years out, maybe a CC or two would help in the long term.

* A little more info like loan balances, initial loan amount, interest rate, other loans or credit cards would help. 

 

Message 5 of 5
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