I am curious, if I pay off my current auto loan, will it have a negative, positive or no impact?
It should not be negative because the account will stay on my credit report but will be paid and closed, but will it impact the credit age or anything? Because the account will still be on my report but it will be closed and paid instead of open with a balance. Not sure if it will help, hurt or do nothing.
Anyone with knowledge or personal experience please reply, thanks.
I’m curious as well, since I will have mine paid off in a few months. I guess I will wait and see!
Tagging The Penny Hoarder credit expert @dear.penny for a quick dose of her wisdom!
Also, please take a look at the Q&A archive of the live chat she hosted in January. Lots of great relevant discussion took place that I think you will enjoy reading through: https://community.thepennyhoar…nny-credit-card-debt
Hi everyone! Sometimes your credit will take a hit when you pay off your car or any other loan, especially if it’s one of your oldest accounts. (This happened to me when I paid off my first car loan. My score fell by around 50 points, but I should note that I was a 20-something without much credit history, so the effect might have been more acute.)
Your score usually bounces back pretty quickly, though. I think mine did within a few months. The important thing for credit scores is to always have an account open at any point so that you’re building positive recent history. So if you don’t have any open credit cards, try to get one now before the loan is paid off.
It’s pretty annoying when your score drops for doing something good, like paying off a loan, but at least it’s just temporary — and probably worth the short-term pain because you won’t have a car payment anymore!!!
Here’s a column I wrote about this topic: https://www.thepennyhoarder.co…-off-car-loan-early/