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 Credit Report
Profile Image

Question By
AhMessica

0 Contributions
0 People Helped
Paying off young installment loan early?
I've got around 15 accounts, half and half open/closed ranging from 9 yrs oldest to my most recent installment loan of 9 months age. All in good standing, never missed a payment, no derogatory marks, always keep balances below 20% and I'm satisfied with my current score. My aaoc is 2yrs, 10 mos and I'm planning to pay off that young installment loan. I have pretty substantial auto loan and plenty of available credit which I use and pay off regularly. I know there aren't any sort of guarantees in this number game, but since the account is new, do you figure my aaoc -and thus score- will improve or suffer after I pay off the loan?

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
1884 Contributions
3672 People Helped

A couple of points...

first, check on weather there are any fees involved with paying off the loan early.  Many creditors have penalties involved with paying off a loan early to compensate for their loss of income from interest you won't be paying.  Some are designed to pay off when ever you want.  So checkwith the lender on that before going forward so that you know in advance, no one likes that kind of surprise. 

Second, in general there isn't much advantage in paying off early.  You will be better off if your not paying the interest, but it may not be to your advantage, score wise.  The account will show paid, and thats always good. It will continue to show on your credit report for 7 years as a closed/paid account from the date of the last payment.

So The age of your accounts shouldn't suffer, It will still be counted from the date the account was originated, You may lose a few months on the tail end, but by then all your accounts will be much older.

Good luck

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.