Personal Loan Payoff

[Aiyvega]

Hi guys!  I need some advice. I am working on paying off some debt to be ready to apply for a mortgage late spring/early summer. Currently I have two credit cards, one is a limit of $1000 and there's $391 balance. The other card I have is a credit limit of $25k and it's maxed out. I also have a personal loan that was for $1500 and the balance is $1150 left. If I pay the minimum payment t on that loan, it will be paid off next September. 
my question is, should I payoff the personal loan this month or will that cause a drop in my credit score?  Should I just continue paying it until it's paid off in September and redirect that $1000 to my big credit card?  I recently moved in with my daughter for the next 6 months to pay off this debt, save for closing costs and raise my credit score. Any suggestions? Thank you!

[pizzadude]

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@Aiyvega wrote:

Hi guys!  I need some advice. I am working on paying off some debt to be ready to apply for a mortgage late spring/early summer. Currently I have two credit cards, one is a limit of $1000 and there's $391 balance. The other card I have is a credit limit of $25k and it's maxed out. I also have a personal loan that was for $1500 and the balance is $1150 left. If I pay the minimum payment t on that loan, it will be paid off next September. 
my question is, should I payoff the personal loan this month or will that cause a drop in my credit score?  Should I just continue paying it until it's paid off in September and redirect that $1000 to my big credit card?  I recently moved in with my daughter for the next 6 months to pay off this debt, save for closing costs and raise my credit score. Any suggestions? Thank you!

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If you're trying to improve your FICO mortgage scores then you should focus on the maxed out credit card first as it's likely tanking your scores right now. 

[JoeRockhead]

I agree that the credit card debt is suppressing your scores, especially the maxed out card. I'd recommend paying down the smaller balance card first (or pay it off) but also throwing everything extra you can at the maxed out card to get that balance paid off. Until then, just pay the loan as normal. 

[Aiyvega]

Would paying off the loan cause my score to drop?  I need to be sure my score is steady during my mortgage loan process also. 

[JoeRockhead]

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@Aiyvega wrote:

Would paying off the loan cause my score to drop?  I need to be sure my score is steady during my mortgage loan process also. 

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If it's your only open loan then yes it will cause a score drop/penalty for no open loan. You'll get the max score benefit from it when the balance goes below 9%.

[Aiyvega]

 Makes sense, I have a car loan also. Just trying to figure out the timing of when to pay things off for the best jump in my scores to prepare for a mortgage loan. 

[pizzadude]

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@Aiyvega wrote:

Would paying off the loan cause my score to drop?  I need to be sure my score is steady during my mortgage loan process also. 

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Have you pulled your mortgage scores to see where you currently stand ?   As mentioned above you need to address the maxed out CC if you want to have the most postitive impact on your scores. 

[Horseshoez]

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@Aiyvega wrote:

 Makes sense, I have a car loan also. Just trying to figure out the timing of when to pay things off for the best jump in my scores to prepare for a mortgage loan. 

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Given you have a car loan then paying off the personal loan won't do much of anything to your scores.  As others have said, that $25K credit card with high utilization is what is killing your scores.

[Aiyvega]

According to My Fico my mortgage scores are:

Equifax 662

Transunion 636

Experian 637

[Horseshoez]

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@Aiyvega wrote:

According to My Fico my mortgage scores are:

Equifax 662

Transunion 636

Experian 637

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Just curious, how are those in relation to your FICO 8 scores?