Question

I’ve seen some posts about paying off cars early. Do I understand that it hurts your credit to do so? And how much does it hurt? We owe around 15K on it paying $691/month. I’m thinking we could build our savings back up quickly if we free up that money and we would have less debt. After that is paid off we only have our mortgage (just bought) and about 50K in student loans . But we are doing the income driven repayment since my husband works for the government and we have 5 years left til the rest is forgiven. (I wish we would have refinanced those right out of school and just paid them off aggressively but now we are too far in to change that)

Answer 1

It won’t necessarily “hurt”. Installment loans are viewed differently. So you may see a temporary decrease in your score, but it will go back up pretty quickly. But the temporary decrease comes from paying the installment on time. So an open, positive account has more of an impact than a closed, paid off account. But the drop will only be temporary.  

Answer 2

I heard that there are talks in Washington about not continuing student loan forgiveness, I’ve also heard stories about people being denied when they finally applied to have the remaining forgiven.  

Comments

@kiln24182 oh no

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@flameproof35628 look at the Fb page public service loan forgiveness. Im on that plan too. It’s going no where.  

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@preparatory8067 & @flameproof35628 I’m on the plan too, but at the end of the day they could get rid of with an executive order.  

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@preparatory8067 oh my gosh I’m so depressed. Okay I’ll look for it.  

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From what I read if they did get rid of it, it will be for new borrowers. Existing borrowers working towards it would still be able to get it.  

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I heard only a small percentage actually got their loans forgived. For whatever reason, they are not holding up their end of the deal.  

Answer 3

We have paid off 3 cars, ranging from 6 months to 3 years early. Every time our credit score went UP within 30 days

Answer 4

Can I ask why it would matter if your credit score dropped? The only "good" thing about a credit score is that it can help you get into more debt. and like others have said, the chance of having your loans forgiven is slim to none so I wouldn't bank on that as a solution

Comments

@manos88 yes I agree and we don’t ever carry credit card debt. But there have been a few times where we wanted to apply for a credit card when making a big purchase in order to get a large amount of bonus points. Which we did and that translated into a few airline tickets being free. We do use our credit card for every thing but pay it off monthly and we rack up points or cash. But I also think it’s psychological with my credit score. We both have really high credit scores and maybe I’m a little too attached to that.