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Question By
michaelc57

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what happens when you pay your 60 month car loan off in the half the time
what will happen to my credit score? will the score go higher, or stay the same?

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Thats a tough one

Helpful to 3 out of 3 people

I did the same thing. My credit score did not go up when I paid it off. If anything it may have dropped a few points because now I have a "closed" account which hurts your credit score, and also because I dont have much credit, now all those on time payments I had been making every month dont report every month.

So even though my income to debt ratio has gone down becase I paid it off, it kind of hurt my actual score because of the two reasons I gave you. "closed" and the on time monthly reporting.

If you dont have much credit like myself, then I suggest aquiring a secured credit card. Its the best way to raise your score fast. Just be sure that they report to all 3 agencies. Most of them, after a year of on time payments will give you your security back. Do not go above 30% utilization. If you have the money, get two secured cards with two different companies. The higher the dollar value the better for your score. My score went up about 40 points in a couple months.

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Helpful to 1 out of 1 people

Some people do experience a temporary drop in their score due to loss of the on time payments every month. However, in my opinion the benefits of owning a car outright vs paying someone $$$ plus interest every month far outweigh the credit benefits of carring that debt.

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You save on interest!!!

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Usually, when paying an account in full, your score will raise some.  That you are able to do so in half the time will save you a lot of the interest charges that you would ordinarily have paid, so that's an extra bonus.

Play with the debt repayment calculator to get an idea of the positive benefits this repayment plan will bring!!!

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Remember, a strong FICO is only a part of having your financial house in order. Cash flow is important as well. Cash flow means you can pay off other debts. Consider paying off the loan and then putting that monthly "payment" towards other debt, like your credit card with the highest interest rate/balance.

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