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How does making early car payments affect my credit rating?
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Dr. Butt, CPA wants to know:
I am the co-signer with my mom when we financed a car from Honda. It lasts for 5 years. I am trying to pay it off in 2 or 3 payments within 1 year to avoid having to pay the high 9% interest rate. By doing this, how will it affect my credit rating? Will I have better credit if I pay it off throughout the 5 years?
I am the co-signer with my mom when we financed a car from Honda. It lasts for 5 years. I am trying to pay it off in 2 or 3 payments within 1 year to avoid having to pay the high 9% interest rate. By doing this, how will it affect my credit rating? Will I have better credit if I pay it off throughout the 5 years?
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Tagged with: Butt • Car Credit • Car Payments • Car Rating • Co Signer • Cpa • Credit Rating • Honda • Interest Rate • Mom
Filed under: True Credit
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I would pay it completely off AFTER a year.
A year’s worth of non late payments is perfect for your rating.
When you pay it off remember to pay a little extra in case they charge daily balance. They will send you a check in the mail for the extra amount. This is better than being a couple of dollars short.
It will not hurt you. The only that hurts is LATE payments or NON-payments.
grate…it redues yer debt…that help.
Auto finance is what I do for a living and sorry but I must disagree.
Credit scores are 90% based on the last 24-months of history so to help your credit the most you need to pay at least 18-24 months on this loan before you pay it off.
There are lots of lenders that will not even look at approving someone if they don’t have at lest 18-months of paid as agreed credit history.
And by the way 9% is not high.
Paying it off early won’t do anything extra for your score. But you will save a lot of interest. You may want to take Spifman’s advice and take 18 months to pay it off to get the optimum credit value, even if it will cost you more interest.
This is fine. Either paying earlier or paying just in time will help your credit. The important thing is not to pay late.