@Anonymous wrote:I’ve recently inherited some money, and have already covered all the bases for paying down credit cards, emergency savings, long-term savings, etc. One thing I really want to pay off is two auto loans I have. However, I’m trying to build my credit and I’m concerned paying off these recent loans will hurt my credit since they are relatively new loans. One loan was opened in July 2020, and the other in March 2021. Both loans have extremely terrible terms (high interest, 8-10 year terms, etc.). I’ll certainly pay them off sooner rather than later, but if I’m trying to build my credit in the next 6-12 months for other purposes (mortgage refinancing, new rewards credit cards, etc) will I experience any dip, and would that just be temporary?
If you'd like to save on interest and have the means... pay one loan off and pay the other down to about 18 month's of remaining payments.
You only need one loan and 3 credit cards for optimal score.
With your statement of refinancing your mortgage indicating you have a mortgage, you don't need either car loan for scoring purposes. Paying off both auto loans would improve your debt to income making it easier to qualify for your refi.
