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?Pay Down or Pay Off Personal Loan Will Impact My Credit Score ?

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Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

I've used Plastiq for about 6 months now to pay my mortgage through various credit cards as well as my auto loan, which I just paid off via CC through Plastiq.

Message 11 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???


@Anonymouswrote:

I've used Plastiq for about 6 months now to pay my mortgage through various credit cards as well as my auto loan, which I just paid off via CC through Plastiq.


For some reason on Plastiq it says that American Express cards can't pay this recipient. I wonder what the problem is. 

Message 12 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???


@Anonymous

For some reason on Plastiq it says that American Express cards can't pay this recipient. I wonder what the problem is. 


Amex cards can't be used for mortgage or auto loan payments through Plastiq.  I think if you read the terms and conditions you'll find the list of restrictions for Amex cards.

Message 13 of 22
thornback
Senior Contributor

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

Thx for clarifying that, BBS -
Sorry, OP - my mistake. I thought amex was OK.
Personal Aphorism:"Forget What You Feel, Remember What You Deserve"
Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 04/2022: EX 796 ✦ EQ 793 ✦ TU 790
Current FICO 9s | 04/2022: EX 790 ✦ EQ 788 ✦ TU 782
2022 Goal Score | 800s

My AAoA:
4.6 years not incl. AU / 4.9 years incl. AU
My AoOA: 9.2 years not incl. AU / 11.2 years incl. AU
Inquiries: EX 0/12 ✦ EQ 0/12 ✦ TU 0/12
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Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 14 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

I think Amex may have been ok for loan payments in the past, as I feel like I did use Amex at least once for a mortgage payment.  I do know for sure for the last 3-4 months at least that Plastiq hasn't allowed Amex for those types of transactions.

Message 15 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

Hey all.  Just a quick word, to circle back to our friend's original question.

 

We know that he has student loans, an auto loan, and a personal loan.  We know how much he owes and the original loan amount for the personal loan.  I do not believe he's told us these amounts for the student loans and the auto loan.

 

If he owes almost the entire amount on the other loans, then paying off the personal loan will actually cause his total installment utilization to go up, since the only loans that will remain will be his student loans and auto laon.  The higher util might cause a score decrease (though not by much).

 

Two takeaways:

 

(1)  When assessing score impact of a loan payoff, the only way to know is to have the current balances and original loan amounts for all loans.  A payoff could cause installment utilization to stay the same, to go up, or to go down.

 

(2)  Score impact is only one consideration.  Interest rate should be a bigger one for most people.  My guess is that the interest rate is significantly higher for the personal loan, so paying it off (or paying it down but keeping it open) is probably the right choice.

 

 

Message 16 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

Gulp .... Welp I paid it in full a few hours ago. I guess I can just hope for the best (fingers crossed)

Message 17 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

With other open installment loan(s) IMO you won't see a significant score change.
Message 18 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???

Hey BBS.  I think in in this particular case you are very likely to be right.  That's because the loan that the OP has just paid off has a high utilization and I doubt that his other loans have a utilization that is that much higher.

 

But as a general rule -- if you have another open installment loan, there'll be little or no effect -- that's much less certain.  I have seen the following thing (or something like it) happen many times in the forum:

 

Guy has a brand new car loan (20k) and a very old mortgage.  Mortgage is almost paid off (say he owes 5k out of 300k).  He gets a small windfall of 5k and proudly decides to pay off his mortgage.  He is then stunned when FICO penalizes his score by 30 points.

 

But our OP should not worry in his particular case.  If he is genuinely worried, he can list all of his loans (prior to payoff) with their balances and original loan amounts, like this:

 

Loan 1.  Balance = ____    Original Loan Amount = ____

Loan 2.  Balance = ____    Original Loan Amount = ____

Loan 3.  Balance = ____    Original Loan Amount = ____

etc.

 

BBS or any number of people will be able to tell him how the payoff will have affected his total installment utilization and FICO 8 score.

 

Message 19 of 22
Anonymous
Not applicable

Re: ??? Pay Down or Pay Off Personal Loan Will Impact My Credit Score ???


@Anonymouswrote:

Hey BBS.  I think in in this particular case you are very likely to be right.  That's because the loan that the OP has just paid off has a high utilization and I doubt that his other loans have a utilization that is that much higher.

 

But as a general rule -- if you have another open installment loan, there'll be little or no effect -- that's much less certain.  I have seen the following thing (or something like it) happen many times in the forum:

 

Guy has a brand new car loan (20k) and a very old mortgage.  Mortgage is almost paid off (say he owes 5k out of 300k).  He gets a small windfall of 5k and proudly decides to pay off his mortgage.  He is then stunned when FICO penalizes his score by 30 points.

 

But our OP should not worry in his particular case.  If he is genuinely worried, he can list all of his loans (prior to payoff) with their balances and original loan amounts, like this:

 

Loan 1.  Balance = ____    Original Loan Amount = ____

Loan 2.  Balance = ____    Original Loan Amount = ____

Loan 3.  Balance = ____    Original Loan Amount = ____

etc.

 

BBS or any number of people will be able to tell him how the payoff will have affected his total installment utilization and FICO 8 score.

 


Thousands 

(PAID OFF) Loan 1.  Balance = 14.8    Original Loan Amount = 18.5

Loan 2.  Balance = 33.5   Original Loan Amount = 42.5

Loan 3.  Balance = 36.0   Original Loan Amount = unknown/financial aid



Message 20 of 22
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