What would you do?

[Rudy1927]

Only five open accounts and a score around 730. It should go to 800 in 2 years (based on simulation when something falls off) working hard. Two Amex cards keep balance low. A mtg of $186,000 and two car loans for $10k each. Have $60,000 want to wack something down.  I'm afraid if I pay off cars I might not have enough accounts open. All interest rates approx the same. What should I do? And thanks

[Anonymous]

Only need 1 installment to get a score boost, so the mortgage would probably do that. You have enough revolving accounts too.

Aging is the best way to go IMO.

[Anonymous]

^^^ correct, only one installment is needed to satisfy the credit mix factor and your mortgage will do that. I'd pay off the cars and be done with those debts. The rest of the money I'd just save for the time being - with a lot of uncertainty likely ahead of us still before the economy regains steam, having cash available is a great plan.

[VanderSnoot]

Agree with what has been said: decide on an amount you want to spend, put it towards one or more loans, and save the rest for a rainy day fund. You only need one installment loan to satisy credit mix.

If it were me, I would crunch the number to decide whether to pay off the two cars in order to have the peace of mind of only one loan, or put it towards the mortgage to take a big bite of equity. (Or a combination.) A small difference in interest rate % can add up over the course of a home loan.

Also, for credit mix, you are better served with 3 credit cards. I believe you said you have 2 Amex. You might want to add a 3rd card from a different network, perhaps a Visa or MC since those have the largest networks.

[Rudy1927]

Thanks All so far.

[SouthJamaica]

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@Rudy1927 wrote:

Only five open accounts and a score around 730. It should go to 800 in 2 years (based on simulation when something falls off) working hard. Two Amex cards keep balance low. A mtg of $186,000 and two car loans for $10k each. Have $60,000 want to wack something down.  I'm afraid if I pay off cars I might not have enough accounts open. All interest rates approx the same. What should I do? And thanks

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1. What is my objective?

2. Which scores am I most interested in improving?

3. What are the credit limits and current balances on the 5 revolvers?

4. What are the original loan amounts and balances on the 3 installment loans?

Once I have the answers to those, I can tell you what i would do.

[Anonymous]

He only has 2 revolvers which is definitely not enough. You are under a penalty until you reach at least 3. And you cannot reach the best mortgage scores unless you have 5 revolvers.

Likewise, I would put the money towards the loans however I thought it would benefit me the most financially, and I would have the objective of obtaining three more cards whenever I found the ones I wanted. The sooner you do it the sooner they can begin to age.

The minimum for max scores on all versions is five revolvers and one installment loan. You need not worry about having extra installment accounts, you need a few extra revolving accounts.