No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
@Anonymous wrote:
I currently have 2 installment accounts (open autos) , and I am contemplating selling one to get out of the debt. I am wondering how this will affect my rebuilding at this point. Here are the stats:
Current open trade lines:
1. Auto loan :Balance is 18k, opened in 2014, had 5 late pays in 2 years (30 days)
2. Auto loan :Balance is 22k, opened in July 2018,current , no lates
3. Discover card (AU only): Balance is 430 CL 700, opened in 2008 with zero lates.
Pretty sure that selling NO 1 auto will affect the AAoA , but to what extent. Will selling this lower my UTIL % and help or will it hurt due to closing an open trade line? I guess I have an option of selling either auto , but I am leaning towards #1 at this point.
Purely from a FICO scoring perspective, closing the newer loan and leaving the older one open will give you the best scoring.
Closing an account does not impact your AAoA at all. The account will remain on your CR and continue to age and impact your AAoA the same way that it would if you didn't close it.
As BBS mentions, closing an account will not affect AAoA at all.
Closing an open loan often does affect something called Installment Utilization. The problem is, we can't assess what your IU is because we do not know the original loan amount for each loan. If you can tell us that, we can advise you better.
SouthJ is almost certainly correct in infering that your IU will decrease (which is good) if you pay off the very recently opened auto loan and that your IU will increase (bad) if you pay off the one opened in 2014. But we can say for sure if you tell us the original loan amounts.
Before you consider paying off any loan you should pay your credit card debt down to $20 or so, and then always have your card reporting a small balance every month. It's easy to spend a lot on the card while making sure it always reports a small balance. Lots of people can walk you through that if it is not clear.
PS. Installment Utilization applies only to loans and other installment accounts. Credit cards are not a part of the IU calculation.
Revolving Utilization applies only to credit cards and other kinds of revolving accounts. Loans are not a part of the RU calculation.
@Anonymous wrote:
I currently have 2 installment accounts (open autos) , and I am contemplating selling one to get out of the debt. I am wondering how this will affect my rebuilding at this point. Here are the stats:
Current open trade lines:
1. Auto loan :Balance is 18k, opened in 2014, had 5 late pays in 2 years (30 days)
2. Auto loan :Balance is 22k, opened in July 2018,current , no lates
3. Discover card (AU only): Balance is 430 CL 700, opened in 2008 with zero lates.
Pretty sure that selling NO 1 auto will affect the AAoA , but to what extent. Will selling this lower my UTIL % and help or will it hurt due to closing an open trade line? I guess I have an option of selling either auto , but I am leaning towards #1 at this point.
Reducing monthly debt obligations is a good strategy. Going from 2 cars to one will undoubtedly drop your insurance premiums as well. Unfortunately, the highest scoring option would likely be paying down both loans but leaving them open. That would result in a substantially lower aggregate balance to loan ratio compared to paying off either loan completely.
Do you like one car better than the other? Will one be easier to sell than the other? Financially what makes more sense? These considerations might be more important than any score implications. Regardless of which way you go, AAoA will remain unchanged because closed accounts continue to factor into age of accounts until they drop off your report.