Auto loan rewrite

[Anonymous]

Hello,

Does anyone know what the consequences of an auto loan rewrite are on one's credit score? I am preparing to purchase a home next year and I'm looking to reduce my monthly debt obligation by paying off most of my auto loan and doing a rewrite to have a minimal monthly car payment. My score should go up by having a lower ratio of outstanding debt to available credit, right? Or will the rewrite negatively impact my score? Thanks.

- Ben

[pizzadude]

Are you asking about refinancing your auto loan ?

Auto loans are installment loans and FICO doesn't weigh the amount of installment debt very heavily at all, so you won't see much score improvement as your balance decreases.

If you open a new auto loan and pay off the old loan I wouldn't expect much FICO score change, other than the fact that you'll be adding a new account which may slightly lower your average age of accounts, and also you'll incur a few inquiries, which might slightly lower your score as well.    But I think your score would have plenty of time to recover over the next year before you begin home shopping.