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Posted in Auto Loans
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xxmaggs

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Closed auto loan still showing as open?
I paid off an auto loan about 3 weeks ago and I still shows open on my credit report. I'm looking to get a new car loan but my credit isn't the best (571). Should I wait until this loan says closed on my credit report before applying for a new loan? Will it showing as open affect my approval odds?

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Generally speaking, you do stand to lose points from paying off any installment loans as you might lose the scoring benefit from "Credit Type Mixture". If you didn't? Then maybe because you still have other open installment loan. Paid accounts don't usually drop off your report for up to 10 years. Tho it might not help one's scores but have previously positive auto loan goes long way to future lenders.

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If you have documentes that shows you paid it off, like pink slip, cancelled check or online/paper statements? Then it shouldn't be a issue with new lenders whether it shows open or closed, besides all they need to do is read your credit report, if the term of loan was for 60 months and its been opened for 61 months, and it doesn't showed that you are currently behind? Then it's PAID. Your actual issues are with, what make your score at 571

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Whether you should wait or not would depend most on your income and "debt to income ratio", could you technically afford both loans? If not, you need this one to be closed, If you could afford it, then no problem. The main problem that you will have is your scores. Keep in mind that most auto lenders use a version of FICO scores, not the ones here. If the FICO score that the lender uses is comparable to the one that you listed, all you will find is high interest expensive loans, if you can find one. I advise working on your credit for a year before trying to finance an automobile, but of course, it is your call. Also keep in mind when the current loan does close, scores are likely to decrease as you are closing an account. Lots of info on this site and around the net on how to build/rebuild credit scores. Truly, that should come first before any major financing.

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Having it show as open would affect the odds of approval because it looks like you still have the loan (it is already factored into your credit score).  My last car loan I paid off took about a month and a half to actually drop from the credit report for reference.  If you do wait for it to drop off your credit score may increase and you could possibly get a better rate all else equal.

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Reply by
Havvkeye

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TTU above says the account closing will lower your score.  While this has not been my experience, they have been around here longer (and probably have a better sample size to state facts from) so probably take my last sentence with a grain of salt.

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