Since you still have a lease loan you wont get the no installment loan penalty. Anything that will lower your DTI is what you want before the home loan app. And of course the higher the scores the lower interest. No worries.
@Michizane wrote:You should probably see a decrease from closing those other loans since your average age of credit will go down...It probably went down due to the new inquiry and the addition of new credit (reducing your age of credit). However, depending on where your credit card balances were, those increases will probably offset credit score drop.
That said, are you trying to buy a house or use credit for anything else right now? If not, I wouldn't worry about it since you will need to pay off those installment loans someday. And you should recover most of your points over some time anyway. Its hard to tell how long it will take to recover or how much points you will lose, since that depends on your entire credit profile.
@Michizane AAoA isnt affected on closed accounts. Open or closed is factored in. Once an old account falls off after closing on avg 10yrs. Then AAoA's drop. Or applying for new credit.
@reedsl wrote:I should have researched this first and now I am worried I have shot myself in the foot. I recently took out a personal loan with NFCU which reported today and my score dropped 11 points. I used those funds to pay off higher interest credit cards and totally payoff 2 other installment loans with One Main and Upgrade. Am I going to see a further drop since I completely paid off One Main and Upgrade? Would it have been better to leave a small balance? I thought that only mattered for revolving credit but reading some other threads it looks like it is a factor on installment loans as well. I also have an auto lease loan which is 90% paid.
Your score drop most likely came from the new hard inquiry and the new account hitting your reports. This lowered several aging metrics which lowered your score. No worries. It will rebound as the new account ages and reports good payment history. You should not see any score loss by paying off the other installment loans. You still have your new loan and car loan both open for credit mix, and I seriously doubt your installment utilization is going to change enough to merit a score decrease. Depending on how your revolving utilization is reported, you may see a score increase when the new balances of your credit cards are reported. You didn't do anything wrong. Word of advice...it's the easiest thing in the world to just rack up more credit card debt after a debt consolidation loan leaving you in more debt than you were when you started. Have the discipline to not do this to yourself...THAT would be shooting yourself in the foot. Good luck!
Around these parts we push Finances over FICO. You took the loan to pay off higher interest cards/loans. You saved $. Thats the main goal. Once NFCU is paid it will all come back. FICO looks at loan util %'s in a whole different light than revolving credit util%'s. So no you didnt shoot yourself in the foot. You made a money saving move. Great!
