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After the person refinances, will my score go up due to the loan being paid off?
@Anonymous wrote:After the person refinances, will my score go up due to the loan being paid off?
Actually if you have no other open installment loans once the auto loan closes, unfortunately you'll end up losing points.
Thanks! I do have my own car loan, though. Just was wondering what would happen if I helped out a friend...
It’s not that simple it depends on your aggregate loan utilization now, and then when he refinances. Also have average ages to consider.
It may not be a big deal if you already have a car loan. Again depends on where you’re at on yours.
If you already have a loan and you cosign on another one, you'd take a score hit for the new account, as well as the drop in AAoA, and a hit for the fact that the new loan will be at full balance.
@OmarGB9 wrote:If you already have a loan and you cosign on another one, you'd take a score hit for the new account, as well as the drop in AAoA, and a hit for the fact that the new loan will be at full balance.
@OmarGB9 a loan does not reset the AOYRA Metric and does not cause Scorecard reassignment and the typical new account penalty. The only cost to him would be the change in average age if it were on a threshold and aggregate loan balance.
Assuming his own was already at 85% a refi for his buddy at 100% wouldn't make much of a difference. It all depends on the specifics. If that were his only loan aggregate would go from what 85% to 92.5%?