does paying off my auto loan improve my credit score?

Answer 1

Paying off all of your debts immediately does not help you with improving your credit. Because you should show lenders that you are a good BORROWER. Your existing report shows lender that you pay your payments in full once you have money and you don’t when you are financially in trouble. Therefore you are not a good borrower to a lender (you are risky and they don’t make money out of you). So here some stuffs I suggest to do to polish your credit report and improve your credit:

1) Do not spend more than 1/3 of your limit. That's a rule. Say you have $500 credit limit. So do not spend more than $150 with your credit.

2) Do not pay your existing credit balance in full every month. Pay more than minimum payment but do not pay full. Say your minimum due is $10. I suggest you to pay like $50-$70 each month. Yes you should pay some interest but that's a price to improve your credit.

3) There are lots of articles here which you can find useful to boost your credit.
http://www.howtoestablishgoodcredit.com/Credit_Articles/index.php

Answer 2

1

Answer 3

Installment loans build credit by making the payments over time. Paying off the loan early won't do a thing for your score. It will save you a lot of interest. Sometimes it's smarter to think with your pocketbook and not worry about your score. The small increase in your score you might get if you continue the monthly payments just ain't worth the interest your could save by paying it off early. If you want to continue building your score, get a credit card. Use it and pay the balance in full every month. That will give you good payment history on another type of credit and will improve your history/score.

Answer 4

Paying off your auto loan WILL NOT INCREASE your credit score. In fact having an open auto loan that you are paying on time helps your credit score. The best way to increase your credit score is to have credit cards open with balances less than 50 percent of your credit limit. If you don't have a credit card opening one will help. Just keep the balance under 50% of your credit limit.

Answer 5

Any time you can pay off a long-term debt like an auto loan, it's a good thing. I am not a credit advisor, but I did recently pay off two auto loans and saw my credit score soar.

I learned from this guide, linked below.

Hope this helps!

Answer 6

Yes paying any debt off improves your credit.

Answer 7

Yes, there is a separate section to your credit report with debts you've paid. I have some old loans still on there from a few years back and they give me bucco points.

Answer 8

Yes for many reasons. It lowers your debt, it shows responsibility for paying your bills and if you have paid it for at least 12 months as agreed it shows that you can manage your money.

If you have not paid it for at least 12-months? I would wait until you have before paying it off since most banks look for at least 12 payments when they are reviewing loan applications.

Answer 9

Yes!!!!!!!!!!!!!!!!
It shows potential lenders your level of responsibility and that you paid the loan completely off.
The more you pay your bills on time, or early, the higher your credit score will rise.

Answer 10

I don't know if your credit score will improve, but your debt to income ratio will improve.