Trying to minimize score hit

Anonymous · ‎08-01-2015

I have the following outstanding accounts ( all in good standing)

Student Loan - 9900
Personal Loan -4000

CC
Discover -500/ 13000
Cap 1 - 600/15000
Lowes - 200/17000

My plan is to PIF my student loan and personal loan at the end of this month, In addition to the outstanding CC . Should I PIF the loans and a little more than the minimum for the CC or should I pay them all in full? I don't want my score to drop too much from paying off the loans.

Suggestions?

IncrsCreditScore1 · ‎08-01-2015

I recommend paying them all in full. And, if you charge something on any of the cards to continue paying in full each month.

January 2018 Scores - EQ 797 | TU 800 | EX 798 | ~~Started Gardening Again on March 21, 2017

Anonymous · ‎08-01-2015

What is the interest rate on each of the loans?

If either of the two loans has a reasoably low interest rate, I'd consider the possibity of paying off much of the principal but still keeping the account open for another couple years. With a fairly low rate AND very little principal you'd be paying almost nothing in interest. Do the math, figure out how much it would cost you and decide whether it would be worth it to you. If not, then sure pay both loans off.

But if you decide that you don't want to pay the interest on an installment loan then you sure don't want to pay the much higher interest on credit cards. Regardless PIF your credit cards if you possibly can every month.

Just to make sure I have the numbers and the question right, until recently you have needed to be in debt to about $15,000. But you have gotten a sudden windfall of cash and you are going to spend it on clearing yourself of your debt. Is that right?

Anonymous · ‎08-02-2015

Until this month, I only had 2 store cards and two installment loans on my profile. Hance the reason for keeping the installment loans. I recently added the CC..both of which have zero APR until next year. The windfall of cash is coming from an investment property I am selling. The interest rate on the student loan is low ..around 4.5% and the personal loan is around 12%.

So yes, I would like to clear myself of debt... Just trying to figure out..should I pay off the installment loans one month and pay off the CC the next month. I read about others getting 20-30 point drops after paying off loans.

Revelate · ‎08-02-2015

@Anonymous wrote:
Until this month, I only had 2 store cards and two installment loans on my profile. Hance the reason for keeping the installment loans. I recently added the CC..both of which have zero APR until next year. The windfall of cash is coming from an investment property I am selling. The interest rate on the student loan is low ..around 4.5% and the personal loan is around 12%.

So yes, I would like to clear myself of debt... Just trying to figure out..should I pay off the installment loans one month and pay off the CC the next month. I read about others getting 20-30 point drops after paying off loans.

You can solve the installment penalty cheaply with a $500 secured loan from Alliant, so the FICO drop shouldn't be that big of a concern.

If you want to try for style points on your current profile (hey better to have an aged installment line than a brand new one), pay the majority of the installment loans down to some small balance, and then see if they'll just let you sit on that balance for a while, may be able to keep those installment lines open and active for a good long while especially that student loan for nearly no additional cost. The key to not taking the hit (and might even get a bonus depending what your starting balances were on them) is to not pay them off completely, but pay them down to some point where the interest is absolutely irrelevant, like $20 left on each one where tossing a yuppie food stamp on it will pay it off completely if needed later... but apparently more lenders than not of the ones we've tested so far, will just push the payment date waaaay out in the future and you can just leave it idle, in some cases for years in advance. Just keep track of the account so you don't miss that payment in the future.

Anonymous · ‎08-02-2015

@Revelate wrote:
@Anonymous wrote:
Until this month, I only had 2 store cards and two installment loans on my profile. Hance the reason for keeping the installment loans. I recently added the CC..both of which have zero APR until next year. The windfall of cash is coming from an investment property I am selling. The interest rate on the student loan is low ..around 4.5% and the personal loan is around 12%.

So yes, I would like to clear myself of debt... Just trying to figure out..should I pay off the installment loans one month and pay off the CC the next month. I read about others getting 20-30 point drops after paying off loans.
You can solve the installment penalty cheaply with a $500 secured loan from Alliant, so the FICO drop shouldn't be that big of a concern.

If you want to try for style points on your current profile (hey better to have an aged installment line than a brand new one), pay the majority of the installment loans down to some small balance, and then see if they'll just let you sit on that balance for a while, may be able to keep those installment lines open and active for a good long while especially that student loan for nearly no additional cost. The key to not taking the hit (and might even get a bonus depending what your starting balances were on them) is to not pay them off completely, but pay them down to some point where the interest is absolutely irrelevant, like $20 left on each one where tossing a yuppie food stamp on it will pay it off completely if needed later... but apparently more lenders than not of the ones we've tested so far, will just push the payment date waaaay out in the future and you can just leave it idle, in some cases for years in advance. Just keep track of the account so you don't miss that payment in the future.

Thanks for the feedback.