Pay it off?

My credit is in the 800s. My wife and I have no credit card debt but have a mortgage and owe about 12k on her car (currently 1 1/2 years ahead on payment)
I’m leaning towards knocking it out. I don’t plan on making any major purchases soon.

 

if you pay off your car and your score takes a hit, it's not because you're "altering the deal." it's more complicated than that and could be a variety of different things. one of those things is that other than your car loan, your other debts are high interest credit cards. if you close out your "good" loan (i forget what the industry term for it is) and only left with the "bad" loans then yes, your score will take a hit.

i pay off my credit card every month (no interest payments to the bank) and paid off my truck early. my score is still 780+.

if your score is 800+ and you're paying over 4% on an auto loan you need to get that refinanced right away or pay it off. that is too high.

 

You got hosed on the finance rate. It seems you know finances pretty well but I don't get why you're asking. If you maxed out your Roth/IRA/savings for the year and have no bills over 4.2 then pay it off.

 

A lack of used credit/lack of debt can also drop your rating though you may have actual cash money coming out of your ears.

Mine has dropped over the past few years simply because while I pay my bills on time and use a CC on occasion, I don't have a dime of debt, no car/house/CC/Student/anything and never carry a balance forward month to month on my CC's.

If you aren't paying them interest, you are not liked or wanted by the credit world because they can't make money off you. If they can't make money, they punish you VIA your lowered credit rating. [and higher interest rates if they are based partially on your credit score and you want to borrow $$]

Personally......well, they can ''Bleep'' off, I just upped my emer fund amounts and they can all go to hell. They can get rich off their loan slaves and I'll stay free of debt if at all possible. However, I shouldn't be punished by lower credit scores and higher rates because I'm reasonably responsible financially.

 

Lol what...you have $50k cash? You’re either trolling with this post and you know what you’re doing or you’re not and you need to talk to someone. You shouldn’t have that much in straight cash, earning nothing. Invest it/diversify.

 

I was in the same boat. And then I actually got a credit card (first one and I was 32 lol) and I use it for everything now. They see me rack it up each month and I pay it off with cash every month, so I’m not paying interest. My scores instantly jumped like 75 points and I’m getting free money with the points/rewards.

 

a big part of your credit score is on-time payment and credit history so yes if you don't have any open debt and not making payments it will decrease your score.

however, what you say about not paying them interest hurting your score is simply not true. i charge EVERYTHING to multiple credit cards and pay them all off monthly. with all the points and cash back rewards i get, they're actually paying me. my score hovers around the 800 mark. i imagine if i had a longer credit history (i'm 31, first card was at 18) and fewer inquiries the last couple years i'd comfortably be over 800.

edit: if you're going to deride the system, don't deride it for the things that make sense. it's meant to apply a numerical value for your trustworthiness to pay back a loan not how big your savings is. if you don't want to play by their rules then pay cash for everything. no one is stopping you.

my issues with the system are the predatory practices, how hard it is to fix errors, and how lackadaisical the institutions are with the personal info we entrust them with.

 

Not trolling. It’s in a savings account, i put some money in weekly and usually a chunk of my quarterly bonuses go in there. It adds up. I have other monies with Edward jones and a Roth IRA.
I don’t wanna ever touch my invested money unless SHTF.

 

I've never had a cedit card and I'm 51
My wife, that's a different story.

 

You shouldn’t have that much cash sitting and making you zero interest, ESPECIALLY with loans. If you don’t want to put that in “riskier” investments, pay off the loans. If you have all interest loans paid off and still have a big chunk of change like that and you (for whatever reason) want a massive safety net like that for when SHTF, at least throw it in a CD.

 

I always try to pay cash or pp credit and pay it off within 6 months. Ive never understood why if you can pay it off and do you get punished for it with the credit score as the banks don't make money off you. So if you want to have a high score dont pay it off. If your like me have the means and hate owing people, pay it off. A possible middle ground is pay maybe $100-200 or whatever more plus the reg note.

 

I have no debt outside of my two houses and rotating credit card debt. My score jumped from low 700s to kissing 800 when I got a credit card and I never let it hit interest. It’s always paid off instantly.

You should pay it off.

 

The cd is not a bad idea. I have no idea what the rates are, I need to check. All my investments are “low risk”. I’m not making huge gains off of them but I’m a pussy when it comes to possibly losing money.
Thanks for the input, for real.

 

When I was going thru the finance process for my house the freakin' Credit Union did a hard inquiry twice within a short period of time and knocked my score down 18 points.

 

Put your savings somewhere else. No reason to get only .000002% And yes, pay it off.

G.

 

The beauty of the CDs is you can cash them out at the drop of a hat if you need cash. You won’t lose any of your initial investment if you cash them out early but you’ll lose the interest gained. But if you’re just holding on to them if SHTF, then you shouldn’t be cashing them out anyway so it’s a free 3ish% each year on your cash.

 

I didn’t want to pull a lump some of cash out of savings. Instead I would pay extra each month instead of putting more into savings. That way I always kept the savings that I had.

 

I’m a banker. Take my advice.
Pay it off. No question. It won’t hurt your credit score. At least not enough to matter

 

Unrelated to your question, although I am surprised you only managed a 4.74% rate with your excellent credit. When I bought my truck in '16 I financed it on a 48 month note for 1.8%, then paid it off a year early (no effect to credit score). I checked recently and was able to find 2.95% from the same local CU.

 

That was literally the best rate I could get at the time and that was thru a credit union.