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Paying off CC and Auto Debt

Buffycreditslayer
New Member

Paying off CC and Auto Debt

So, its bonus season (my first) and I am looking to pay down my debt. 

 

I have 13k in an auto loan, 50k in student loans, and ~10k in CC debt. 

 

I'm planning to pay off my CC debt and auto loan immediately, but I am wondering if that is the best strategy. I've had my auto loan since may 2018, so about 2.5 years, and I have 3.5 years left on the loan. I really want to get rid of it, because its like 11% APR and I pay $400 a month. The CC debt I have  is from various sources. One being my discover card which has a high interest right now and is at 99% UTI. 

 

My student loans are federal, so I am not really concerned about that right now. This new admin is saying they are going to do something about that, so I don't want to jump the gun and miss out on some forgiveness or anything. But once the road is clear (that they will or will not do anything) then I will knock the student loans out.

 

What I am really concerned about is my score going down because I paid off this car. Right now my scores are EX 639, TU 613, EQ 606

I have a one baddie (a car lease I owe 9k on thats charged off, they really screwed me over and I refuse to pay this). But high high utilization around 60%. So if I pay all of that off, I know it should really help my scores. 

 

One thing I want, and been planning for, is to get better credit cards. I really want a NFCU credit card with a higher limit (~25k+),  the Delta Skymiles AMEX card, and an Amex Charge card. I have not applied to anything in 1.5yrs and been saving my INQs for these 3 cards. 

 

I would appreciate any advice on strategy.

Message 1 of 7
6 REPLIES 6
thornback
Senior Contributor

Re: Paying off CC and Auto Debt

Hi and welcome to the forums!

 

 

My thoughts:

Pay your off your credit cards and pay off your car loan.  You still have other active installments so if there is any drop from paying off your auto, i really don't think it would be too drastic.  

 

Finances over FICO - always.  Don't continue to throw money at high interest if you don't have to.  Your scores will recover - and actually, the gain from reducing your revolving util may very well offset any loss from paying off the auto.  

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2020: EX 780 ✦ EQ 771 ✦ TU 781
Current FICO 9s | 11/2020: EX 793 ✦ EQ 780 ✦ TU 778
2020 Goal Score | 800s


My AAoA: 3.8 years not incl. AU / 4 years incl. AU
My AoOA: 7.10 years not incl. AU / 9.10 years incl. AU
Inquiries: EX 0/6 | 1/12 ✦ EQ 1/6 | 2/12 ✦ TU 0/6 | 1/12
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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 2 of 7
BrutalBodyShots
Super Contributor

Re: Paying off CC and Auto Debt

Pay off your credit cards first and throw whatever you have left at the auto loan.  If you can close that out, great.  It won't impact your scores in anything but a positive way, as you have at least one other open loan.  After that you can figure what you're saving per month on not having the car payment plus CC minimum payments + interest and throw a portion of that toward your other loans if it makes financial sense. 

Message 3 of 7
_bobby_lee
Valued Member

Re: Paying off CC and Auto Debt

The maxed out Discover with high interest is definitely the item that is doing the most damage to your score and your finances. Since utilization is ~30% of your credit score,  as soon as you pay that down you will be 1) losing less money on interest and 2) boosting your score and being in a better position for your next credit move, such as the NFCU card you have your eye on. And as the others suggested, the auto loan would be the next to work on, then student loans. PS I like your user name Smiley Very Happy

Cards are shown in chronological order of opening, 2014 - 2021.


Starting Score: 657
Current Score: 759 TU 749 EQ
Goal Score: 800+


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Message 4 of 7
Phana24
Established Member

Re: Paying off CC and Auto Debt


@Buffycreditslayer wrote:

So, its bonus season (my first) and I am looking to pay down my debt. 

 

I have 13k in an auto loan, 50k in student loans, and ~10k in CC debt. 

 

I'm planning to pay off my CC debt and auto loan immediately, but I am wondering if that is the best strategy. I've had my auto loan since may 2018, so about 2.5 years, and I have 3.5 years left on the loan. I really want to get rid of it, because its like 11% APR and I pay $400 a month. The CC debt I have  is from various sources. One being my discover card which has a high interest right now and is at 99% UTI........

 

What I am really concerned about is my score going down because I paid off this car. Right now my scores are EX 639, TU 613, EQ 606

I have a one baddie (a car lease I owe 9k on thats charged off, they really screwed me over and I refuse to pay this). But high high utilization around 60%. So if I pay all of that off, I know it should really help my scores. 

 

One thing I want, and been planning for, is to get better credit cards. I really want a NFCU credit card with a higher limit (~25k+),  the Delta Skymiles AMEX card, and an Amex Charge card. I have not applied to anything in 1.5yrs and been saving my INQs for these 3 cards. 

 

I would appreciate any advice on strategy.


Definitely get the CC debt paid off, but look into whether you can simply pay the auto loan down to under 10% of original.  I believe that will look even better than paying it off for FICO purposes.  That will leave you with little interest charges, and just make small monthly payments.  The lease CO will be the biggest obstacle to your obtaining the cards you desire, especially Amex.  If you were screwed over that badly, consider a separate post on that topic alone.  If you have any legal case whatsoever, it might be worth your while to look into some legal help with your bonus $$$$$. 

Message 5 of 7
Buffycreditslayer
New Member

Re: Paying off CC and Auto Debt

Thank you all for your advice. I think I will pay it all off and leave the student loans for now. 

will update with result. Hopefully, like one comment said, the paying down off the discover card will offset the auto loan disappearing.

*pray for the FICO*

Message 6 of 7
RemnaD
Established Member

Re: Paying off CC and Auto Debt

I hope this works out for you.  I am new to the Forum but from what I have learned paying off the auto loan will affect your mix and thus your score but you have to weigh that against everything else going on in your finances.   I don't have an auto loan because I paid cash for my truck last year and sold my rental property. Ironically, I'm getting the urge to buy something like a townhouse or condo ( for rental purposes) just to get the edge on the credit. Been hoping to get my scores up to get a good % rate for the new car. Just got a $40k preapproval at 5.6%, so must be moving in the right direction. 

Message 7 of 7
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