Finally - Auto loan PIF

[Anonymous]

I finally bit the bullet and paid my car loan off to Wells Fargo ($1044.24).  It wasn't due to be paid off until July this year but I figured what the heck.  I also paid 4 small balances off from cc/store cards.  My question is how many points can I expect my score to increase?  If I calculated my utilization right, it's 36% right now.  Not sure if that's good or bad.

	Balanced owed	Credit Limit
Best Buy	$         487.77	$     700.00
Baxter CU	$      2,059.13	$  3,000.00	High because of 2 BTs
Capital One	$         345.82	$     550.00
Chase	$      1,228.95	$  1,500.00
Citibank	$      1,668.95	$  2,000.00
Credit One	$                -	$  1,575.00
Dell	$                -	$  3,000.00
HSBC	$                -	$  1,200.00	PIF 4/7/11
JC Penney	$                -	$     750.00	PIF 4/7/11
Kohls	$         102.05	$     400.00
Merrick	$         445.42	$  1,150.00
Newegg	$                -	$  1,076.00	Not reported to CA
Orchardbank	$         521.95	$     960.00
PayPal	$                -	$     330.00	PIF 4/7/11
Sam's Club	$                -	$  1,000.00	PIF 4/7/11
Target	$         446.90	$     800.00
Walmart	$                -	$     405.00
	$      7,306.94	$20,396.00
	Utilization	36%

[MarineVietVet]

Congraulations on getting out from under that car loan. I just did that myself last month. It's a great feeling to have one less debt. Paying off installment debt though usually doesn't impact a score all that much but the important thing is being dent free on at least one item.

36% utilization isn't terrible but still kinda high. But ANY debt paydown is a cause for celebration!

What was the utilization before the pay down? Also remember that scoring looks at both overall and individual account utilization plus the number of accounts reporting a balance at any one time. If I counted correctly you have 12 out of 17 CC accounts reporting a balance which is probably hurting a little bit.

I'm terrible at guessing any change in your score but you'll know for sure as soon as the CRA's update everything. Just keep working on those card balances and you'll be fine. 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[tpatterson2k9]

Crazy,

From what I have read in the past, and from what I have read on these forums, I don't think your score will increase much at all.  The reasons are that 1) installment loans (such as an auto loan) do not factor into your credit score as much as credit cards do, and 2) paying off the auto loan does not change the status of the auto loan on your credit report (i.e., it will still read "pays as agreed").  Auto loans and mortgages are good to have on your credit report because they represent a good mix of credit, but other than that they really only help raise your average age of accounts/credit history.  Basically, now that you have paid off the auto loan, it will continue to read "pays as agreed" until it drops off your report  in 10 years (I think) due to being paid off.

To be honest, it would have helped your score more if you took the $1,044 and instead paid down your Citibank card (83.45% util), your Chase card (81.93% util), and/or your Best Buy card (69.58% util).  Utilization is not only an aggregate of all your balances divided by your total credit limit, but it also applies to individual cards of which you have quite a few that are high utililization.  Going forward, it would improve your score quite a bit (maybe 20-30 points) if you paid off all but one or two of yours cards.  On the card(s) that have a balance, the optimal utilization for your credit score should be between 1-9%.  That is, you want at least one card reporting some kind of balance, but you don't want that balance to exceed 9% util.  Hope this helps.

[Anonymous]

Thanks Marine and TP!  There's still a lot of stuff I don't understand but I'm slowly and surely getting there.  I honestly didn't know an auto loan wouldn't factor into the scoring of my credit but I'm glad I know now.  I think my util before I paid those accts off was at 39 or 40%.  I probably won't be applying for any credit cards until late fall around the holidays.  By that time a few of the inquiries from last fall should have fallen off.  I want the Amex Zync and a Discover.

[MarineVietVet]

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@Anonymous wrote:

Thanks Marine and TP!  There's still a lot of stuff I don't understand but I'm slowly and surely getting there.  I honestly didn't know an auto loan wouldn't factor into the scoring of my credit but I'm glad I know now.  I think my util before I paid those accts off was at 39 or 40%.  I probably won't be applying for any credit cards until late fall around the holidays.  By that time a few of the inquiries from last fall should have fallen off.  I want the Amex Zync and a Discover.

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Let me clarify a little. Installment loan utilization is scored but it's such a small part of the scoring formula as to be virtually non-existent. Revolving utilization is 30% of your total score and is second only to payment history (35%) in importance.

Here is a rundown of What's In Your FICO Score.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".