Credit Advice

Have a question? Have advice to share? The combined knowledge and experience of everyone in the Credit Karma community can help you. Enter your question or help others below to get started!

Question

Posted in Auto Loans
Profile Image

Question By
chhabra496

0 Contributions
0 People Helped
New Auto Loan - pay off credit or installment loan?
So I've got about $2700 on a credit card and $3500 on a personal loan outstanding. This month I can pay off one or the other completely.

To obtain a new car loan from Mercedes (~50k) which would be better? The score cruncher says my score will go from 675 to ~740 if I eliminate the credit card balance.

Also should say I've got about 50k in other debt (another auto loan, couple installment loans).

Income won't be an issue in terms of DTI (~175k).

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW
All Responses

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
Top Contributor
5038 Contributions
1136 People Helped

Whatever you do, keep in mind that paying off and closing accounts usually results in a score decrease, so you may not want to pay the loan completely off. Carrying a zero balance and showing no revolving activity will also cause a score to decrease. So whatever you do, for scoring purposes, I would pay nothing to zero. Credit card utilization has more of an impact on Fico scores, so if the card is over 10% utilization of the credit line, you may want to tackle that, you should also look at the utilization of the loan you are considering paying off, while it doesn't affect scoring as much as revolving credit, it still has an impact.

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Reply to this Question

Write your response:
Enter Your Comments

The Credit Advice pages of the Site may contain messages submitted by users over whom Credit Karma has no control. Credit Karma cannot guarantee the accuracy, integrity or quality of any such messages. Some users may post messages that are misleading, untrue or offensive. You must bear all risk associated with your use of the Credit Advice pages and should not rely on messages in making (or refraining from making) any specific financial or other decisions.