Question On Paying Off Installment Loans

[Anonymous]

Hello,

I have only 2 installment loans showing on Transunion and Experian. I'd like to pay them off because the interest rates are high. They are the only installment loans I have showing on those reports though. If I pay them off will that drop my credit score? The reason I ask is because I know FICO likes mixed credit which I believe is 10pct. If I pay them off I will only have 3 revolving credit accounts open. I do not have a mortgage.

Thanks in advance.

[MarineVietVet]

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@Anonymous wrote:

Hello,

I have only 2 installment loans showing on Transunion and Experian. I'd like to pay them off because the interest rates are high. They are the only installment loans I have showing on those reports though. If I pay them off will that drop my credit score? The reason I ask is because I know FICO likes mixed credit which I believe is 10pct. If I pay them off I will only have 3 revolving credit accounts open. I do not have a mortgage.

Thanks in advance.

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HI there.

You'll get different opinions and here is mine. As long as you don't use up your savings I advise always paying off any debt as fast as possible without consideration of a score. Being debt free should always be #1.

You might lose a few points by these closing but that is trumped by having less debt. Even closed accounts are counted in the credit mix although open, active accounts are given more weight.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[LS2982]

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@Anonymous wrote:

Hello,

I have only 2 installment loans showing on Transunion and Experian. I'd like to pay them off because the interest rates are high. They are the only installment loans I have showing on those reports though. If I pay them off will that drop my credit score? The reason I ask is because I know FICO likes mixed credit which I believe is 10pct. If I pay them off I will only have 3 revolving credit accounts open. I do not have a mortgage.

Thanks in advance.

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It's possible because your not getting the actual history of the loan. You could see a raise for DTI improvement, but I would think there would be a minimal drop if any.

[pizzadude]

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@Anonymous wrote:

Hello,

I have only 2 installment loans showing on Transunion and Experian. I'd like to pay them off because the interest rates are high. They are the only installment loans I have showing on those reports though. If I pay them off will that drop my credit score? The reason I ask is because I know FICO likes mixed credit which I believe is 10pct. If I pay them off I will only have 3 revolving credit accounts open. I do not have a mortgage.

Thanks in advance.

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If the interest rate is high, I think it makes sense to pay them off.   Any FICO score ding from not having open installment loans would be offset by the thousands of dollars in interest that you saved.