Similar Auto Loan Question

[Anonymous]

I have a similar question about my situation specifically in regards to paying off an autoloan.  Have an auto loan that has about 2 more years on it that could be paid in about 4 to 5 months.  That being said, it is possible that I will be applying for a mortgage in the next 12 months.  I have no credit card debt, but do charge and pay it off monthly.  I have a sizeable student loan that I pay monthly as well.  If I paid off the autoloan now, could it hurt me in the long run as far as my FICO score goes and applying for a mortgage? As a side note,  I got the original car loan in January of 2007 and refinanced at a much lower rate through the credit union in November of 2007.  So I originally paid on the first loan for 10 months and have now been paying on the new/refinanced loan for 6 months.  Not sure if any of that matters.  I've been told that just making minimum monthly payments for the life of the loan can work wonders for a credit score, just simply because a longer history.  The same person also told me that the student loans and the car loans are looked at as different debts.  What gives?

Message Edited by mispoken on 04-26-2008 07:22 PM

Message Edited by mispoken on 04-26-2008 07:25 PM

[RobertEG]

It is probably a good idea to pay it.  Since you have another install loan, it probably wont hurt your credit mix very much.  It will reduce your %install loan util, and most importantly, it will save you $$ by avoiding future interest on the loan.

Also, it appears that your current FICO concern is based upon your desire to app for a mortgage in the near future.  That is important.  FICO is just a portion of mortgage loan evaluations.  While not a part of FICO, debt to income is important in mortgage loan consideration.  Paying off the auto loan will reduce your monthly debt obligation.  That will only help you in the mortgage app process.

From what you have said, I would pay it off.

Incidently, while not a part of your post, I would advise you NOT to apply for any new credit if you will be applying for a mortgage loan in the near future.

Message Edited by RobertEG on 04-26-2008 07:26 PM