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Wednesday10

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Should I pay off my auto loan while I'm house hunting?
My car loan is just over $4k and I have enough in savings to pay that off entirely. I've been looking to buy a house and have started house hunting recently and I thought I read somewhere that paying off a long term loan can actually LOWER your score because it lessens the average age of your credit history. I'd be paying this loan off months in advance and figure the money I spend on car payments every month could go toward saving for a down payment on a house, but if my score will get lower (even if just for a few months before it goes back up) is it worth it to pay the car loan off? I don't want the time to come for them to look at my score and decide now's not a good time for home buying (FYI - my CS is currently above 700). Any advice would be helpful. Thanks!

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Probably not

As you've said, paying off and closing the loan will most likely cause damage to your scores. Unless you have a couple of other installment loans on your reports the damage may be somewhat significant. You could pay the loan down a couple of grand and that should help raise your score, get your loan paid down and it would look good under review. It is usally never a good idea to do anything (opening or closing accounts) with your credit prior to going for a mortgage loan. Make sure to check your FICO mortgage scores if you haven't done so yet, be aware that mortgage lenders are not going to use the scores that you find on here.

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Don't forget to save some money for the downpayment on the house as well.

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