To increase your credit score is it good to pay a loan almost all the way down to help the debt/credit ratio?

4 Comments

1. Aiza says:

   September 25, 2011 at 4:06 pm

   I was told by a loan specialist at bank of america that paying of a loan every month looks good on your report, as long as you’re never late, and pay more than the minimum. it shows that you have a good account in revolving and that you are willing to pau what you owe.
2. Melody says:

   September 25, 2011 at 4:48 pm

   you should just pay it off completely.

   if you have a card that you use regularly, you can pay 95% of the card off each month (and leave a little bit on the card).

   Supposedly it’s supposed to boost your credit score, but I would only do that with a credit card you use a lot (your main one) since that is the one where it would make sense to roll over your debts month to month.
3. bdancer222 says:

   September 25, 2011 at 5:45 pm

   Installment loans, including student loans, are not included in the credit card debt to limit ratio that impacts your credit score. That’s just for credit cards. Carrying balances of more than 30% of your limit, hurts your score. Pay off the balances and your score rebounds.

   There is absolutely no benefit to carrying balances on your credit card. You don’t get any extra points for paying interest.

   Installment loans build credit by making payments over time. Paying them off early does nothing extra for your credit score. It just saves a lot of interest. Substantially paying down the student loan, and continuing to make payments against a smaller balance for a year or two, would make some sense to improve your score — although a pretty expensive way to buy a few score points. But leaving such a small amount open on the loan is pretty silly.
4. Ted says:

   September 25, 2011 at 6:19 pm

   The ratio is for revolving accounts. So why not pay it all the way down; then you will have 100% available.