805 credit score, car loan payoff before house: impact & timing?

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  • March 23, 2024 at 7:20 pm #94090 Reply
    USER

      Hey guys wanted to pick the brains for advice!

      Long story short: I have 805 Experian score, owe 2K on a car, 7 payments to go, (loan finishes around October) which is about when we want to buy a house in Nov-Dec-Jan ish but afraid that “credit mix” will be disbalanced and read horror stories of score dropping 40pts for losing an installment loan. Mortgage lender says “keep paying as usual” (I assume to show I can keep paying debt on time) but I’m afraid to be closing an account so close to needing to qualify AND feel like maybe I should pay off tomorrow and have these few months for score to recover from CC usage etc. have 2 cards I can use, that I pay off in full, otherwise debt free besides the car. All opinions welcome even the ones I’m not asking for or haven’t thought of.

      Thank you!

      March 23, 2024 at 7:23 pm #94091 Reply
      Jeremy

        I heard there is no functional difference for any score over 760. At that point you are getting the best possible rates.

        March 23, 2024 at 7:25 pm #94092 Reply
        McCracken

          I’d listen to your lender. Paying it off now vs having it paid off in a few months instead of going to impact the score – it’s still one less account open and will impact your average age of credit when it closes, no matter when it closes.

          Getting the pull right before it closes might be good. But I think you have 45 days, not 90 before the hard hit will double ding you.

          FWIW we’re building a house and needed to get preapproved – so we have to do a hard hit now, but we don’t close for 10 months. So presumably, there would be another hit then. One lender actually said “your credit is so strong I’m not gonna pull it again in 10 months just need to recollect documents around employment etc”.

          Have you seen: 23 y/o, 180k/yr income, invest for house in 5-7 years?

          March 23, 2024 at 7:25 pm #94093 Reply
          Denise

            Either pay off super early, or have credit pulled right before the last payment.

            I’ve heard it doesn’t matter for higher credit scores but it doesn’t hurt to make sure.

            March 23, 2024 at 7:25 pm #94094 Reply
            Danny

              You’re really overthinking this. You won’t have any issues either way.

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