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Auto Loan benefits to FICO


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Hello everyone,

This will be my first post ever!!! :)

I have a Honda Financial Services auto loan with my brother as co-signer. After putting some money down at the start of the loan, I was paying down $20,000@6.9% APR over 5 years. The payments came out to $395.00 per month. It is currently down to ~14,000 right now. The credit reports are showing that the loans started in June 2005. I have paid the bill religiously from August7th, 2005 till now, with no late payments.

Now my brother wants off the loan as co-signer because he thinks it will work against him when he goes for a mortgage on a home. He has A1 credit (I assume that is the best), he has a condo with his wife and a nice single unit investment property , a condo I think, that he rents out to co-eds. My father is ready to be my co-signer BUT Honda Financial Services will not change co-signers. So I need to find a new loan elsewhere. I've been having trouble as the loan with high rates being offered. It's not like getting a new car :(

OK, here is the question. When does paying the car loan off impact my credit score? Would it make a big difference if I keep the loan going till after June 2007, the 2nd anniversary of the loan? I thought I read somewhere that two year mark is a sought after milestone in a loan.

By the way, I have only this loan going at this point, nothing else positive on my credit reports; I also have a few unpaid little things on my credit report(s). I'm working on strategies to build credit and repair problems as well as pay those small debts but my FICO wont be ready for the refinancing of the auto loan.

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Do you know what your FICO score range is now? People can have some bad things and have scores approaching 700, and they can have a few bad things and have scores approaching 500.

If your scores are in the mid-600s, you can probably refi on your own.

You will need to refinance the loan. Honda may be willing to do that for you, but may not be.

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Let me ask the specific question again...

When does paying the car loan off impact my credit score? Would it make a big difference if I keep the loan going till after June 2007, the 2nd anniversary of the loan? I thought I read somewhere that two year mark is a sought after milestone in a loan or is it three years??

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When does paying the car loan off impact my credit score? Would it make a big difference if I keep the loan going till after June 2007, the 2nd anniversary of the loan? I thought I read somewhere that two year mark is a sought after milestone in a loan or is it three years??

The 2-year mark is not the 'magic' point for your FICO scores to significantly benefit from an installment loan. I was paying on my car for 2½ years (perfect payment history) and my score dropped almost 20 points when I paid it off. However, some can testify that their scores rose after paying off an installment loan; it just depends on your credit file as a whole. Your scores are greatly driven by history; so needless to say, paying it off after 1 year won't be as beneficial as paying it off in 2yrs.

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Thanks Earth Angel. I found earlier today a reference to the scoring system suggest for one of the Big3 that three+ year loans would be consider a long term loan which would give a small bump to your score.

I think I'm going to refinance at 10.74% APR 2-6yr with Wells Fargo (ugh! but they were the only ones I could find so far even with co-signer :( )

-- or --

buy a new car to get ~7% APR (selling my current car if I have the time or trade it in if I don't)

Consumer1 : "Why have the credit Gods forsaken me?!!"

Consumer2 : "Well, did you make the monthly ritual sacrifices to the Gods?"

Consumer1 : "Umm no ... " :roll:

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