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Paying Off Car Loan Early - How will this impact credit score?
Okay, so I've had this car loan since literally my 18th birthday which (obviously) makes this my oldest line of credit. I'm in a position where I can go ahead and pay off the remaining $5000 I still owe on the car in one payment and be done with it (woohoo - saving 350/month!).
I'm thinking it could go either way with either helping or hurting my score though and I'm not sure which one will be more likely so I thought I'd throw it out to y'all and see if you've had a similar situation?
-$5,000 less on my overall debt which is only about $9000 to begin with (student loans making up most of that)
- I'll have more money every month available to pay other debts - I.E. Student loans, CC etc

- It is my oldest line of credit
- This is the only installment loan I have on my credit report

Another possible factor (that's currently bringing my score down a bit) is that I was late on my car payment twice - both 30 days late - one was 1 year ago, the other was 2 years ago. Will this still be factored into my credit score once the loan is paid off? Probably a stupid question but I have to be sure.

So.... any idea if this will be helping or hurting my score?

Just for reference, my score is currently hanging out around the 600 mark on average ( up from about 400 a year ago) - I had no idea what credit was for the first 4 years of my adult life and have since educated myself as much as possible and have been trying to fix the mess I put myself in!

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Even when you close an account it will still be factored into the "average age of accounts" so no harm will be done there.

The late payments will remain on your credit reports for a period of seven years from the time when they occurred whether the loan is open or closed.

You said that you have student loans, so you will still have active loans on your reports even if you close this one.

What will happen? I am not sure, but if it makes financial sense to pay it off and close it, then I say that is what you should do. Credit scores are not everything and we shouldn't revolve are lives around them if it is going to cause financial problems. If paying the loan off is right for you and your finances then do it. Worst case you can always open up a small installment loan down the road to replace it.

Please post back with the results if you do close it, so we can learn from you as well. Good luck.

P.S. As far as the late payments, do some reading on how to write a "Goodwill Letter", just be careful though if you do close this account before hand as some lenders may just delete the entire account if there are any requests or disputes.

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Well yes it will affect your score.  Your score will probably go down a few points because you will have lost part of your "mix" of credit.  But on the other hand I would not pay interest for that mix.

It is your oldest account but you have a couple of late payments on it.  Before you pay it off I would send them some goodwill letters to ask them to take it off your credit report because yes it will still be there even after it is closed.  They might be more willing to do it if you are still a customer.  Otherwise it will be there for seven years.

Good job on learning about credit.  This will help you for the rest of your life.  There are good people on here who are always willing to help.  Also lots of good reading.  I wish I would have learned when I was young.

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