[infinitekidM2C]

To increase credit score is it better to pay off the car or just keep making automatic payments?

I've got like 2 years left..maybe a little less.

[NYCGP]

Less debt = higher score

When looked at in the most simple terms. If you paid it off tomorrow your credit score would go up. However, the score is also based around your ability to borrow and pay in a timely manner so building a solid credit history around paying off debt responsibly is important as well.

[KingOfJericho]

Car loans don't make a huge difference in my experience. Revolving credit accounts move the needle quite a bit. You want to have at least one account (like a credit card) with a LONG history of on-time payments. If this is your only outstanding account then I would not pay it off.

[infinitekidM2C]

It's not my only credit account i've two credit cards and my student loans (yeaaa edamacation)

appreciate everyone's op

[swaite]

I have heard that if you pay it off after 13 months it will have the same effect as keeping the loan out for 72 months. I don't know if there is any truth in that though, so take it with a grain of salt.

[Quick6EF]

I would just keep paying it on time.

There is no best practice when it comes to your credit score beside never being late and not running your credit cards to their limits.


Used to work for Wells Fargo; I've seen 500 credit reports.

[SilverII]

no real effect

[V8Beatr]

I work in the credit industry but I am not the end all be all so take this advice as you will.

1. Keep credit cards below 30% of available credit.

2. Never close an account, if possible.

3. Pay loans early, just not too early. More than 50% early is good yes, BUt sometimes lenders factor that in as lost interest and it can influence the process, although not typical.

4. Keep credit inquiries to an absolute minimum.

5. Too many open "Revolving" accounts can influence a lenders decision to lend.

6. Let at least a little balance ride month to month on "Revolving" accounts. In other words, don't always pay them in full. Yes, that does help your score even though that is not commonly known.

[Quick6EF]

Originally Posted by V8Beatr

I work in the credit industry but I am not the end all be all so take this advice as you will.

1. Keep credit cards below 30% of available credit.

2. Never close an account, if possible.

3. Pay loans early, just not too early. More than 50% early is good yes, BUt sometimes lenders factor that in as lost interest and it can influence the process, although not typical.

4. Keep credit inquiries to an absolute minimum.

5. Too many open "Revolving" accounts can influence a lenders decision to lend.

6. Let at least a little balance ride month to month on "Revolving" accounts. In other words, don't always pay them in full. Yes, that does help your score even though that is not commonly known.

Everything is fine, pretty standard advice as it should be, but what the hell is #6?

Carry a balance? No. Pay it in full every month or get hit with interest.

[KingOfJericho]

Originally Posted by V8Beatr

2. Never close an account, if possible.

5. Too many open "Revolving" accounts can influence a lenders decision to lend.

These two contradict each other.

I would say not to have more than 4 revolving accounts at any time. I keep my longest open with a small balance and my high limit low interest card for big purchases (points) and my Best Buy card because it has zero interest for 18 to 36 months and I pay it off every year when I get my bonus.

Originally Posted by V8Beatr

6. Let at least a little balance ride month to month on "Revolving" accounts. In other words, don't always pay them in full. Yes, that does help your score even though that is not commonly known.

I tell people this all the time and they almost always laugh in my face like the poster above but it's 100% correct. Banks have very little interest in lending money to people who pay their balance each month in full because they make zero money. Those people make great step children but they are terrible banking clients. They would rather someone keep a manageable balance and pay it down periodically which is what I do and I'm over 800.

[Minefield]

Originally Posted by V8Beatr

I work in the credit industry but I am not the end all be all so take this advice as you will.

1. Keep credit cards below 30% of available credit.

2. Never close an account, if possible.

3. Pay loans early, just not too early. More than 50% early is good yes, BUt sometimes lenders factor that in as lost interest and it can influence the process, although not typical.

4. Keep credit inquiries to an absolute minimum.

5. Too many open "Revolving" accounts can influence a lenders decision to lend.

6. Let at least a little balance ride month to month on "Revolving" accounts. In other words, don't always pay them in full. Yes, that does help your score even though that is not commonly known.

#6 makes sense if you work in the credit industry

[V8Beatr]

2 and 5 do contradict slightly but it's all in how you understand credit. It is bad to have an account open a few months, even years and request a close. Let the account close naturally from inactivity when the lender chooses to close it. For number 5 if you have 6 "Revolving" accounts with 50, 60, even 100K available it becomes a risk that you may run it all up quickly then be way over your head.

In short, yes they contradict. Keep accounts open for their history as once they are closed they rapidly become useless to your credit, but don't build up too many accounts as that then becomes a risk, make sense?

[Quick6EF]

Edit:

[V8Beatr]

Also, letting 50 or 100 ride on a credit card is going to gain very little interest, but will help make your credit look a little better. The old saying "you have to pay to play" applies here.

[Quick6EF]

*Agreeing to disagree at this point, we're splitting hairs.


Pay your shit on time, profit.

[infinitekidM2C]

Any other opinions on whether paying off the car will increase my credit score more or less or no difference than continuing to do the auto-payments?

A few peeps have answered that directly.

[KingOfJericho]

My semi-educated response is that it will not meaningfully increase your score. It may bump it up 5-10 points but not 50+ like paying off a large revolving balance.

[carogers86]

Its seems that paying it off tomorrow or in 2 years won't make a difference in how much your credit score will rise. If that is true, then pay it off asap at this point to get ride of monthly payments. You could choose to lower your insurance coverage to save even more. I am sure OP and others would agree that it feels liberating to not have a car payment in the monthly budget.

[persian54]

Originally Posted by V8Beatr

Also, letting 50 or 100 ride on a credit card is going to gain very little interest, but will help make your credit look a little better. The old saying "you have to pay to play" applies here.

I rather not pay 20% interest

I want good credit to get lower rates...no point in paying to get it

750+ is all one really needs nowadays

[KingOfJericho]

20% on $100 of revolving debt is one $20 bill each year. I would happily pay $20 for a bump in credit score. Hell, I already pay $18/mo for credit monitoring through equifax (happily). All we're saying is that carrying a SMALL balance month to month will help your score. The thread is about helping to boost a credit score, not how to pay no interest.