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What will improve my credit score more?

Poquelin
Contributor

What will improve my credit score more?

I just got a loan for $16K for 72 months at 16.78%. My pmts are $360/ Month. My credit score is 638.

I have the ability to pay it off in full by the end of this year. However, from reading other posts, it doesn't look like that will help me much to improve my credit score which is the main goal that I'm trying to accomplish.

Because I want to improve my credit standing, I'm planning to pay off 50% by June'13 and at some point refinance at a lower rate which I expect to be able to qualify for as I continue to improve the management of my credit score.

I have a question for the community:

In order to receive the maximum benefit credit score wise, How long should I keep making payments on my current 16.78% loan before refinancing to a lower rate loan? It seems I've read that paying off a loan too quickly won't benefit me in improving my credit score.

Thank you for your advice!
Starting Score: 638

Current score:
Equifax 680
Trans Union 718
Experian 714

Target Score: 725 Across the Board
Message 1 of 11
10 REPLIES 10
Dustink
Valued Contributor

Re: What will improve my credit score more?

Pay as much as you can, as quickly as you can. There is no reason to pay high interest in hopes of getting a higher FICO.

 

Having a paid auto loan on your report will be helpful enough.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k       $8.5K          Closed          $19k      $6.5k        $24.2k        Closed         $5k       Closed     $8.5k        Closed      @2.49%
Message 2 of 11
traveler2005
Established Contributor

Re: What will improve my credit score more?

Hi

 

That 16%+ interest rate is really high. Have you tried a credit union? I live in South Dakota, my DH got a 3.5% interest rate on a 3 year car loan with a credit score of 643. Its considered a B score.  He also got a .25% off for setting up automatic payments each month.  You should give it a try, it might be worth it for you.  Best Wishes.





Starting Score: TU 573 Exp 523 Lender Pull, Eq 583
Current Score: TU 673, Exp 664.,Eq 672 04/17/2015 TU 741 Equifax 682 Experian 678

Goal Score: 700 across the board


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Last HP 6/10/2015
Message 3 of 11
09Lexie
Moderator Emerita

Re: What will improve my credit score more?

Wow! 16.78%! That's really high. I would recommend refi as quickly as possible.
Message 4 of 11
dodfire
Valued Contributor

Re: What will improve my credit score more?

You should be able to get a better rate with 638...IMO

*8/10/13
Message 5 of 11
YMLDC09
New Contributor

Re: What will improve my credit score more?

I had an auto loan at 20.5% d/t auto credit score of 520. That was August 2012. Fast forward to May 2013. Leased 2 cars last week for our household w/a CS autoenhanced: 683.  What a climb eventhough they are FAKOs. I don't care. On time payments got me that far w/one loan installment. 3 years of on time payments and my FICO goes to 730-ish according to Score Simulator on this site. Oh, and this climb came without CCards or a mortgage.

 

Last week I decided to get out of my GAS Guzzler and tried a radio advertisement of 'getting you out from under your current loan/car'. I went in and looked things over. This stealership didn't work out but I called the Autonation stealership that I originally financed the Jeep through.

 

I ended up leasing a 2013 Chrysler 200 limited for the same payment while getting rid of my negative 8K loan and leasing a 2013 Dodge Dart RallE package turbo.

 

Talk about breathing easier and paying less for gas per month. I am happy!

 

 

 

 

 

Message 6 of 11
Creditaddict
Legendary Contributor

Re: What will improve my credit score more?


@Poquelin wrote:
I just got a loan for $16K for 72 months at 16.78%. My pmts are $360/ Month. My credit score is 638.

I have the ability to pay it off in full by the end of this year. However, from reading other posts, it doesn't look like that will help me much to improve my credit score which is the main goal that I'm trying to accomplish.

Because I want to improve my credit standing, I'm planning to pay off 50% by June'13 and at some point refinance at a lower rate which I expect to be able to qualify for as I continue to improve the management of my credit score.

I have a question for the community:

In order to receive the maximum benefit credit score wise, How long should I keep making payments on my current 16.78% loan before refinancing to a lower rate loan? It seems I've read that paying off a loan too quickly won't benefit me in improving my credit score.

Thank you for your advice!

You want to build credit and have that kind of money to pay loan off that fast.... start a secured loan to yourself (so many credit unions offer them these days... usually 2-4%... secured credit card...

If you can pay this auto loan off in 6 months then do that... your score will follow regardless.... don't carry an auto loan at nearly 17% to build credit!!

 

What and where did you buy this car from? and what bank financed it?

Message 7 of 11
Poquelin
Contributor

Re: What will improve my credit score more?

Thank you for replying to my post Creditaddict,

I have learned a great deal over the past 2 months from all of you.

To answer your question as to who gave me the loan, below is a copy of an earlier post that explains what happened:
Okay, I'm confused!

On Saturday night 3/30. I bought a Ford Fiesta SE. I took out a loan for $16000 at 16.78% for 72 months with monthly payments of $360. I know those are bad terms but I never thought I would get approved by anybody so I accepted those terms. I signed all the paperwork and left with my new car.

The dealership was closed Easter Sunday. So Monday morning, they call me and tell me they found me a better deal. They said they were overnighting a new contract which will give me $16000 loan at 11.7% for 60 months with monthly payments of $357.

Why would they do this? I had already signed the paperwork and accepted the more expensive loan. Don't they make more money by giving the worst possible terms?

Don't get me wrong, I'm not complaining! The 5 point difference and the fewer 12 months in the life of the loan drop the total interest charges from $9550 to $5200. A savings of over $4,000.00.

I intend to refinance this loan in December of this year with a Credit Union so I will finally get decent terms. But I am confused as to why they would give a less costly product after I had agreed to a more expensive one? Does this happen often?

Any ideas out there?

Thank you,
Starting Score: 638
Current score: 638
Target Score: 725

Again, thank you for responding to my post and thank you for your advise.
Starting Score: 638

Current score:
Equifax 680
Trans Union 718
Experian 714

Target Score: 725 Across the Board
Message 8 of 11
hardworkpaysoff
Established Member

Re: What will improve my credit score more?

What's your annual income? What was your down payment?

Latest FICO Score(s): EQ 726 (Lender, 6/13), EX 672 (Dealer, v3 Auto, 5/13), TU 702 (Dealer, Auto 04, 5/13)

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Message 9 of 11
Poquelin
Contributor

Re: What will improve my credit score more?

Annual income $75,000

I gave $1000.00 down payment. It's the minimum they asked for. I figured I would give the least down and then paydown the loan and it would look better credit score wise.
Starting Score: 638

Current score:
Equifax 680
Trans Union 718
Experian 714

Target Score: 725 Across the Board
Message 10 of 11
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