Credit Score & Auto Loan

[CHH1023]

Will my credit score drop if I pay off my auto loan early?

I signed up for 60 month payments but I am able to pay everything off for around 30 monthly payment.

I took out a $15,000 auto loan last February with an interest rate 5.1%. I have made 13 payments so far with $6670 balance left. My next payment is $2100 (roughly 9 months worth of min. payment)

Anyways, I just wanted to know if my credit score will drop if I pay it off too early due to decrease of credit limit and credit to debt ratio ?

[bjl584]

Credit scores are a mysterious thing. My stepfather's score actually went down slightly when he paid his mortgage off early, but it recovered in a few months. So, your score may or may not take a slight hit initially, but it will recover. Besides, reducing your debt is never a bad thing despite what your credit score may indicate.

[littleroc02us]

Personally, I would just concentrate on paying it off. In my experience a lender would rather see someone with some credit lines open with barely any debt and a good income level. The stupid Fico score no one really knows how it works. Over time things will work out if you pay off your debt.

[jpg7n16]

I wouldn't care what it did to my credit score.

Isn't the point of having a good credit score to one day save on interest? So what sense is it to needlessly pay more interest today, in hopes of maybe saving some interest tomorrow? Even if you paid off your loan 'on time', but didn't borrow again for a long time - there may be no difference between paying on time and paying early. So you'd gain nothing at all.

If your goal is to get out of debt, you should focus on paying the loan off. And don't worry about your credit score.


Just cause I'm interested, why do you care what your credit score is?

[JoshuaHeckathorn]

Pay it off early and save the money in interest. Your FICO scores may take a little hit if this is the only installment loan you have on your credit reports, but it'll be worth it and your score should recover anyway.