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Does your credit score drop if you pay off a car early?
Posted on 6/27/17 at 9:48 am
Posted on 6/27/17 at 9:48 am
I am looking to get rid of as much debt as possible before being pre-approved to purchase a home.
Long story short, I am able to pay off my car and I don't want my credit to tank right before they run my credit.
Will it drop if I pay it off early?
Long story short, I am able to pay off my car and I don't want my credit to tank right before they run my credit.
Will it drop if I pay it off early?
9
Posted on 6/27/17 at 9:58 am to JS87
My credit didn't drop after I paid off my truck.
Plus even if it did, it wouldn't be enough to make the slightest dent compared to you not having any debt (assuming that was all the debt you had).
Plus even if it did, it wouldn't be enough to make the slightest dent compared to you not having any debt (assuming that was all the debt you had).
This post was edited on 6/27/17 at 9:59 am
Posted on 6/27/17 at 10:04 am to JS87
Probably not. But, your credit would be relatively higher if you were to keep paying the note.
So it shouldn't drop, but paying on time will increase it over time.
If buying a home, do it before pre approval or you will have to wait over a month after close if you don't want problems with the bank.
I would suggest using whatever funds you are using to pay off car to put down on house, if it helps you avoid PMI. Just a random thought.
So it shouldn't drop, but paying on time will increase it over time.
If buying a home, do it before pre approval or you will have to wait over a month after close if you don't want problems with the bank.
I would suggest using whatever funds you are using to pay off car to put down on house, if it helps you avoid PMI. Just a random thought.
Posted on 6/27/17 at 10:10 am to JS87
quote:
am looking to get rid of as much debt as possible before being pre-approved to purchase a home.
I don't think that would matter all that much in the kind of rater you get.
Posted on 6/27/17 at 11:11 am to JS87
quote:
I am looking to get rid of as much debt as possible before being pre-approved to purchase a home.
This probably won't impact your credit score, but it would help with the size of the loan you qualify for b/c lenders look at how much money you spend each month on other debts.
OTOH, you probably want to avoid PMI if you can. There are obviously moving pieces here to consider.
Posted on 6/27/17 at 4:29 pm to JS87
I don’t believe it affects mortgage scores since you get points for having any installment account on your report including closed ones.
It could drop your Fico 08 score depending on whether you have another active installment loan or not. Not having any active installment load could drop your Fico 08 score by 20-30 points. I have no idea on the new Fico 09.
The easiest way to increase your scores I to focus on credit card debt and to lower credit card utilization as low as possible while letting 1 card report $5 or less.
It could drop your Fico 08 score depending on whether you have another active installment loan or not. Not having any active installment load could drop your Fico 08 score by 20-30 points. I have no idea on the new Fico 09.
The easiest way to increase your scores I to focus on credit card debt and to lower credit card utilization as low as possible while letting 1 card report $5 or less.
Posted on 6/28/17 at 4:48 pm to JS87
my credit score dropped from 820 to 800 after i paid off two student loans debt
Posted on 6/28/17 at 9:16 pm to OceanMan
quote:
If buying a home, do it before pre approval or you will have to wait over a month after close if you don't want problems with the bank.
Not necessarily true. I was still on my construction loan and about to finish my house and convert to a permanent loan. I asked my loan officer if I could go ahead a buy a car before the house was done or should I wait. She said it was fine. I asked a second time, are you sure, she said go ahead so I did and had no issues.
Posted on 6/29/17 at 12:08 pm to JS87
How many payments do you have left? If it's less than six months my lender told me they don't count it against you on your debt to income ratio.
Posted on 6/29/17 at 12:20 pm to JS87
Mine dropped about 10 points or so. Nothing crazy
Posted on 6/30/17 at 5:13 am to JS87
Chances are it will drop a little in short term but not much. If you have less than 10 payments left, the monthly debt is not calculated in your debt to income ratio.
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