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Multiple Active Car Loans

Regular Contributor

Multiple Active Car Loans

Does anyone have any insight on how having multiple active car loans affect the credit score. I know it can play a part in debt to income ratio however does the credit scoring models score you down for having more than one car loan or does it help the score as long as all payments are made on time? What effect do you think paying off one of the car loans can have on the score?
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Established Contributor

Re: Multiple Active Car Loans

Can be penalized for 

 

having too many credit accounts reporting a balance (doesn't affect FICO 8)

 

too much owed in relation to original loan amounts (total utilization across all open loans; doesn't apply to individual loans when multiple loans are open, only aggregate)

 

Paying off one would probably hurt score, unless the other loan is at the same or lower % utilization of its own original loan amount as the other being closed/paid off

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Super Contributor

Re: Multiple Active Car Loans


@MB2714 wrote:
Does anyone have any insight on how having multiple active car loans affect the credit score. I know it can play a part in debt to income ratio however does the credit scoring models score you down for having more than one car loan or does it help the score as long as all payments are made on time? What effect do you think paying off one of the car loans can have on the score?

I currently have two car loans, one in my own name and one as a joint account with my DH. Having the newest one (the joint) has messed up my DTI ratio and amount owed on loans. I think I lost 5-8 FICO points? My score should recover those points once (a) my car loan is paid off and (b) the newer loan is owed less. 



Last HP 09-14-2020



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