Better to Pay off auto loan or not?

[gilesjp1]

Hi All,

I am in the market for a new car. I owe 784.00 on a 18,800.00 car loan I took out in Dec 2011, nerver late. My question is will my car fico go up more if I pay off the loan or is it better to let the current loan report as is before apping with a captive lender?

Thanks.

[sccredit]

My bet is that it would go down as the credit mix would change.  Keep in mind that is pure speculation.

[gilesjp1]

Thats a good point. Thank you.

[Anonymous]

Just paid off my BMW and took a 9 point hit for doing so.  I am sure I will get the points back over the coming months but it is a bit frustrating.

[Anonymous]

I never did understand the philosophy on the way they do this. In my simple little mind a paid off installment with no derogs would look better. Not questioning anyone's experiences. It just leaves me scratching my head as to why it would be handled in this manner when the installment is still on record.

[StartingOver10]

I agree with you, grasshopr961. It appears the auto enhance score likes to see debt based on those reports.

However, IMO, I think it is best to do what is wise from a financial perspective and if you are in the 700s don't worry about a few points, just pay the loan off. JMO.

[Anonymous]

Credit scores are weird that way.  You can own 2 cars and a house outright with no credit cards and 1 mil in the bank and you will be deemed a higher risk than someone with nothing in the bank and 100K in available credit, plus a mortgage.  As long as their DTI is reasonable, they are golden

[Anonymous]

Most likely it will go down(so they say) . just pay it and get another car  

[mtrsprt]

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@Anonymous wrote:

Credit scores are weird that way.  You can own 2 cars and a house outright with no credit cards and 1 mil in the bank and you will be deemed a higher risk than someone with nothing in the bank and 100K in available credit, plus a mortgage.  As long as their DTI is reasonable, they are golden

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Because someone who hasn't had revolving credit, IS in fact at higher risk.....  They may not know how to use it wisely, rack up the balances, miss payments, etc etc......Basically fall into the credit nightmare.  That IS a risk and a reasonable outlook to lenders.