@Ricky_D wrote:First, some DPs:
All my credit cards are consistantly paid off each month. So, zero balances all the time. Current credit scores are Trans722 Ex751 and Eq761.
The scores dropped to those levels after applying for Wells Propel, Barclay, BMW Finance, and Honda Finance all the same two weeks. For the BMW, I wound up paying cash for the car, and with Honda, I wound up trading in my $576 a month car for a $102 a month car. Instead of having to pay $576 a month for 2 more years, I now pay $102 a month for 2 years. Okay, now for opinions.
After the trade, the Honda I have now only has a balance owed of $6,300 which I can pay in full now and not have a car payment.
Or, continue the monthly payment showing the account on my credit file as part of a credit mix of accounts. I do not have any other installments, etc. Home is paid for and no other loan accounts.
Finances over FICO. With that in mind, if interest rate is low on the auto loan, keep it open. For FICO scoring purposes, it requires one open installment loan. If interest rate is high, pay off the loan as quickly as possible. You may lose some points once your only installment loan is closed.
How will this affect my scores in the future?
If reporting zero revolving account utiliization, you'll get the all zero score penalty. See AZEO.
Should I practice AZEO?
If you are seeking credit or want optimized score. See AZEO.
Or just keep paying off my cards every month during uncertain times?
If not seeking seeking credit, pay in full on due date or before statement or AZEO. It's your decsion for best practice.
See comments in red.
@Ricky_D wrote:AllZero, Glad you responded. I hold your insights in high regard along with a few others.
What you say makes sense. Will continue with the car payments for now. After my wife passed in January, my life and finances changed. Only use my cards up to what I can pay in full in a given month. The car downsizing was to save money. Now receiving social security. The finance charge on the replacement car is 5.9% on the $6,300 balance. On the previous car, was paying 1.9%. Applied for the Propel as I have credit card accounts with Amex, Disco and Cap1. Just wanted more bank diversity. 2 weeks and still waiting for Wells' decision.
@Ricky_D Thank you for the kind words. The majority of my credit knowledge comes from members and reading the myFICO forums. I've learned a great deal here.
Your 5.9% APR is decent. In this current climate, perhaps it's best to keep available funds intact in case of emergencies. Once conditions change, you can always re-evaluate your situation with the auto loan payoff.
Good luck on your Wells Fargo application. I hope you get the card you seek.
Diversity is good. Not banks but I've joined quite a few credit unions during my time on the forums. Some offer decent credit products or high yield checking/saving accounts.
@Ricky_D wrote:First, some DPs:
All my credit cards are consistantly paid off each month. So, zero balances all the time. Current credit scores are Trans722 Ex751 and Eq761.
The scores dropped to those levels after applying for Wells Propel, Barclay, BMW Finance, and Honda Finance all the same two weeks. For the BMW, I wound up paying cash for the car, and with Honda, I wound up trading in my $576 a month car for a $102 a month car. Instead of having to pay $576 a month for 2 more years, I now pay $102 a month for 2 years. Okay, now for opinions.
After the trade, the Honda I have now only has a balance owed of $6,300 which I can pay in full now and not have a car payment.
Or, continue the monthly payment showing the account on my credit file as part of a credit mix of accounts. I do not have any other installments, etc. Home is paid for and no other loan accounts.
How will this affect my scores in the future? Should I practice AZEO? Or just keep paying off my cards every month during uncertain times?
From a pure FICO score perspective, the answer is simple: pay the Honda loan down to 9% of the face amount. That will boost your FICO 8 and 9 scores nicely and might even give you a few points on one of your mortgage scores. Then take as long as possible to pay off the remainder.
But that's the answer from a pure scoring perspective. When I had a car loan I paid it down in 6 months because I valued a clean title more than the FICO points.
@Ricky_D wrote:
@AllZero wrote:
@Ricky_D wrote:First, some DPs:
All my credit cards are consistantly paid off each month. So, zero balances all the time. Current credit scores are Trans722 Ex751 and Eq761.
The scores dropped to those levels after applying for Wells Propel, Barclay, BMW Finance, and Honda Finance all the same two weeks. For the BMW, I wound up paying cash for the car, and with Honda, I wound up trading in my $576 a month car for a $102 a month car. Instead of having to pay $576 a month for 2 more years, I now pay $102 a month for 2 years. Okay, now for opinions.
After the trade, the Honda I have now only has a balance owed of $6,300 which I can pay in full now and not have a car payment.
Or, continue the monthly payment showing the account on my credit file as part of a credit mix of accounts. I do not have any other installments, etc. Home is paid for and no other loan accounts.
Finances over FICO. With that in mind, if interest rate is low on the auto loan, keep it open. For FICO scoring purposes, it requires one open installment loan. If interest rate is high, pay off the loan as quickly as possible. You may lose some points once your only installment loan is closed.
How will this affect my scores in the future?
If reporting zero revolving account utiliization, you'll get the all zero score penalty. See AZEO.
Should I practice AZEO?
If you are seeking credit or want optimized score. See AZEO.
Or just keep paying off my cards every month during uncertain times?
If not seeking seeking credit, pay in full on due date or before statement or AZEO. It's your decsion for best practice.
See comments in red.
AllZero, Glad you responded. I hold your insights in high regard along with a few others.
What you say makes sense. Will continue with the car payments for now. After my wife passed in January, my life and finances changed. Only use my cards up to what I can pay in full in a given month. The car downsizing was to save money. Now receiving social security. The finance charge on the replacement car is 5.9% on the $6,300 balance. On the previous car, was paying 1.9%. Applied for the Propel as I have credit card accounts with Amex, Disco and Cap1. Just wanted more bank diversity. 2 weeks and still waiting for Wells' decision.
I am sorry for your loss. Loosing a spouse is difficult.
