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I think I have Every Type of Loan Now...

onetoughkitty
New Contributor

I think I have Every Type of Loan Now...

After years of not having a mortgage or an auto loan, I now have both.  I also acquired a personal unsecured loan for the first time in my life as well.  They may not be at the best rates but after starting with scores in the low 500's, it's nice to say I have a reign in on my credit now and creditors are willing to give me a good look.  Now I'm just playing the "pay it down fast and cheap" game.  Hopefully, in a few months, I will be able to refi the auto loan but at least I can afford what I am paying now. 

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CreditGuyInDixie
Super Contributor

Re: I think I have Every Type of Loan Now...

Given that you have a new mortgage (i.e. a new loan for a huge amount of money, almost all of which is still owed) I would not expect any score improvement from paying down your loans especially fast.  We can explain why that would be the case (it has do with something called "installment utilization").

 

That said, there may be other good reasons (apart from help with your FICO score) to start making an extra dent in one or more of those loans, especially if one of them has a much higher interest rate than the others.

 

Have you paid down all your credit cards to $0 except one -- with the remaining card showing a small-ish balance?  If not, that would be the best place to throw extra money, and it will improve your score.

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ch3cker
Contributor

Re: I think I have Every Type of Loan Now...

How about a secured loan where you borrow against money you have "Certificate of Deposit". Nonetheless, if you're looking to improve your credit score I don't think an array of loans is going to make a big difference. In the long run I would think it will look good to investors to have a good record with many different types of credit but I believe having a good credit history with a long standing record with good payments is the best thing.


EQ 816, TU 821, EX 826
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