Is paying off car loan will get negative affect for me? (The reason is to lower my DTI for mortgage)

[Anonymous]

I heard I will get negative affect on my credit score. I like to run it by you guys. 

My original loan is $50k and $17k left to pay off. My current average Fico 8 score from 3CB is ~790. Paying $870 a month. 

I am thinking about paying off to lower DTI for mortgage. What do you guys think?

[AllZero]

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@Anonymous wrote:

I heard I will get negative affect on my credit score. I like to run it by you guys. 

My original loan is $50k and $17k left to pay off. My current average Fico 8 score from 3CB is ~790. Paying $870 a month. 

I am thinking about paying off to lower DTI for mortgage. What do you guys think?

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Is that your only open installment loan?

ETA, it may lower your DTI but may not impact your EX2, TU 4, EQ5 scores negatively.

[Anonymous]

@AllZero 

yes, it's my only open installment loan.

[AllZero]

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@Anonymous wrote:

@AllZero 

yes, it's my only open installment loan.

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If your prospective mortgage loan lender is making the recommendation to pay off the loan, I would follow their guidance.

Have you determined your MMS Mortgage Middle Scores?

[Anonymous]

@AllZero 

I haven't talked to LO yet. I'm just trying to prepare myself before I talk to them when I'm ready. 

Also, I haven't checked MMS yet. 

[AllZero]

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@Anonymous wrote:

@AllZero 

I haven't talked to LO yet. I'm just trying to prepare myself before I talk to them when I'm ready. 

Also, I haven't checked MMS yet. 

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Before you make any major moves, you may want to consult with them first.

You may want to check your scores to determine where you land. It is a small price to pay for piece of mind. Your FICO 8s may look good but could be different from your EX2, TU4, EQ5 scores. Those are the scores that are used in mortgage decisions. Also, you may want to optimize your revolving utilization before pulling your scores.

You can obtain your 3 bureau mortgage scores at FICO Advanced . Cancel plan after you obtain your scores and reports to avoid re-occurring monthly charge.

Free mortgage scores

EX2 + 3 Bureau scores and reports for $1 at Experian or CreditCheckTotal (part of Experian). Cancel in 7 days or less to avoid the reoccurring charge.

TU4 WyHy quarterly score. Not sure on membership requirement. Maybe hard pull TU?

EQ5 Get a savings account with DCU. Soft pull EQ to be a member. Free monthly score.

[Anonymous]

The loan currently sits at 34% utilization, meaning the scoring boost associate with an almost-paid-off installment loan hasn't yet been realized; That would happen in crossing the 10% threshold.  That being said, without a significant boost being added currently, paying off the loan shouldn't adversely impact your scores much.  If you're talking mortgage scores, it matters even less relative to F8/newer models.  Having 1 less account with a balance could be a good thing for your mortgage scores and certainly $800-$900 less on the numerator of your DTI would be a major positive.