Is paying off a car loan early bad for your credit?

+1 vote
asked Jun 16, 2018 in Buying & Selling by K8TG (250 points)
Is paying off a car loan early bad for your credit?

Can paying off a car loan earlier than the pay off date harm your credit?

1 Answer

0 votes
answered Jun 16, 2018 by Judy (33,430 points)
Paying off a car loan too early can actually hurt your credit score due to it raising your utilization ratio which is the amount of revolving credit you're currently using divided by the total amount of revolving credit you have currently available.

If you keep your car loan open and continue to pay the car loan off until the car loan term is up it will actually improve your credit score.

So keep your car loans or any other loans for the full payment terms and continue to make the monthly payments on time so it will help to boost your credit score since it will show a strong and great payment history on the loans.

Unless you really need to pay the car loan off then don't and continue to make the payments to help improve your credit score.

14,409 questions

15,462 answers

51 comments

435,275 users

...