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devenous

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What happens to my credit score if I pay off auto loan early
I'm planning on buying a house next year and not sure if it's a good idea to pay off my auto loan (about $1,700 at $100 per month) early. I know that in most cases the credit score will drop after the loan is paid off because the credit age/credit line/number of accounts will decrease. In my case, however, the average age of credit history will increase slightly by closing the auto loan account. Is there any chance to increase my credit score if it’s paid off early? Perhaps it doesn’t matter because the balance owed is insignificant? Thanks.

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Score drop from paid/closed loans usualy aren't due to credit age, because in the most widely used score model today, the FICO score models, it uses both open and closed account for age/average age of credit. Score drop tend to come from mixture of account types. However when comes to mortgage? I do believe having one less account in debt is more advantageous than the account mixtures. Best thing to do is to consult with a competent mortgage underwriters.

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