@Anonymous wrote:Here is my situation. I had 10 credit cards and 1 installment loan through Alliant share secured loan (reporting $40 out of initial $500). In April of this year I got a car loan and I have only made regular monthly payments on it for 3 month. All my cards report zero except one reporting small $20 out of $5000. I plan to apply for mortgage soon, so my question is should i pay off the $40 owed on Alliant installment? Will that increase my score since I am still left with 1 installment loan (auto)?
It won't do anything for your scores, one way or the other. So you could leave it alone or you could pay it off. Paying it off would create a very slight improvement in your debt to income ratio, like $8 per month or so, but that's not worth talking about.
Keep it, its costing you maybe 6 cents a month. You will take a hit paying it off. I've had 4 or 5 installment loans reporting at one time. Scores dipped when one was reported as closed. It still has value, even with the new auto loan reporting. I'll be keeping my SSL until the 5 years are up.
@Gmood1 wrote:
Keep it, its costing you maybe 6 cents a month. You will take a hit paying it off. I've had 4 or 5 installment loans reporting at one time. Scores dipped when one was reported as closed. It still has value, even with the new auto loan reporting. I'll be keeping my SSL until the 5 years are up.
I had 2 and closed 1, and it didn't affect my score at all.
IMHO it would only affect your score if it changed the overall installment utilization percentage. E.g., if the paid off loan had an initial loan amount of $20k, paying it off would drop that 20k from the denominator.
In OP's case there would be no effect like that, since the loan being paid off is trivial compared to the loan remaining in place.
@SouthJamaica wrote:
@Gmood1 wrote:
Keep it, its costing you maybe 6 cents a month. You will take a hit paying it off. I've had 4 or 5 installment loans reporting at one time. Scores dipped when one was reported as closed. It still has value, even with the new auto loan reporting. I'll be keeping my SSL until the 5 years are up.I had 2 and closed 1, and it didn't affect my score at all.
IMHO it would only affect your score if it changed the overall installment utilization percentage. E.g., if the paid off loan had an initial loan amount of $20k, paying it off would drop that 20k from the denominator.
In OP's case there would be no effect like that, since the loan being paid off is trivial compared to the loan remaining in place.
How old is your oldest account SJ?
My scores only dropped a couple of points but eventually returned a few months later.
I still have 3 active installments out of 5 that were active a little over a year ago.
I plan to pay the remaining auto loan off next year. Which will leave me 2 active installment loans.
My SSL will help keep things in check a year from now, when the auto loan goes away.
And about time the SSL drops. I'll have 8 years of mortgage payments still active.
By the time I pay the mortgage off, I probably won't care about credit or the scores.lol