Payoff scenario: Auto Loan vs Credit Cards

CreditControl · ‎03-20-2012

I was eagerly preparing to payoff my balance of $5462 with my auto loan today when I decided to do a fico simulator and realized the auto loan (installment) is NOT factored into the open/revolving account total used for the simulation.

Does this mean I would do better by using the money to payoff credit cards instead of the auto loan in terms of increasing my FICO score???

I have a mortgage, a few student loans and credit card debt. Everything is in good standing, I am dinged for high balances and am working to correct this asap!

CSP - 11,000 Chase Freedom 12,000; AMEX Delta Gold 2,000; AMEX Delta Platinum (AU) 15,000; Discover IT 9,500; BOA Cash Rewards 30,000; AMEX BCE 9,900; Belk 7,000; Macys 7,000; Lane Bryant 3,600; HH Gregg 3,000; Care Credit; 7,200; Bloomingdale's 3,000

pakman92 · ‎03-20-2012

you should absolutely pay down the credit card first if your goal is to improve your score. if that is not a factor, you should pay down whatever has the highest interest rate.

My Starting Score: EQ: 691 (11/30/11) TU98: 726 (11/30/11)
My Current Score: EQ: 779 (04/22/13) TU08: 835 (06/03/13)
DW Starting Score: EQ: 742 (03/02/12) TU98: 748 (03/02/12)
DW Current Score: EQ: 784 (03/11/13) TU08: 775 (06/03/13)

FrugalRican · ‎03-20-2012

What are your CC balances, limits, and APR's?

If you are looking for a bump in score, paying off the CC's might help short-term.

But if you're paying a ton on the car and you could use the monthly savings from the car to pay down the CC's faster because the balances are way too high, that might boost you longer-term depending on what you're sporting.

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EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

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pizzadude · ‎03-20-2012

+1 to the above advice. Revolving utilization is weighed much much more significantly than installment utilization, so paying your credit cards down is the best way to get a FICO score boost.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX

GregB · ‎03-20-2012

Put it ALL toward any CC balances up to leaving a small balance on ONE CC. Optimally, pay all to $0 and let one report 1-9% of the CL.

Unless the original balance on the auto loan was only $6-7,000 you would likely gain nothing on FICO by paying it off and only a few points by paying down to a low balance like $1,000.

Aren't you glad you asked first?

Anonymous · ‎03-20-2012

Well, the decision is not that easy...

If you pay off your auto note, you may be able to drop down to minimum liability insurance, which could save you $30-70/ month (in Texas, at least)... Calculate that against the interest on the cards.

Of course, if you're keeping full coverage, it's a moot point.

CreditControl · ‎03-21-2012

Thank you all very much! You have confirmed what I thought I was seeing....I am not in a "hurry" to boost my score though I want to diligently attack the debt. My plan is to go ahead and pay the auto loan off, freeing up that payment to aggressively payoff the cc's.

CSP - 11,000 Chase Freedom 12,000; AMEX Delta Gold 2,000; AMEX Delta Platinum (AU) 15,000; Discover IT 9,500; BOA Cash Rewards 30,000; AMEX BCE 9,900; Belk 7,000; Macys 7,000; Lane Bryant 3,600; HH Gregg 3,000; Care Credit; 7,200; Bloomingdale's 3,000