LeeOblivious t1_ja9imq0 wrote on February 27, 2023 at 8:56 PM

There is multiple buy here pay here financing guaranteed as long as you have a job type places here in town. I used the one in Strafford about 15 years ago, they are good people.

That said paying off your debts will not negatively impact your credit rating (baring though bankruptcy). Depending on how they are structured it will even give a boost to your credit rating. So, I'm concluding that the story here is incomplete.

KTfl1 t1_ja9v3mw wrote on February 27, 2023 at 10:16 PM

Agree. I recommend knowing your credit score before going to a dealership.

AmcillaSB t1_jaa9ny8 wrote on February 27, 2023 at 11:56 PM

Paying off loans will certainly lower your credit score, as you're no longer actively paying off lines of credit.

If you pay for everything in cash, don't use credit cards, etc, it's possible to have a low credit score or no credit history. This can greatly affect your ability to get a loan.

The entire system is such a con, and it makes me angry.

WendyArmbuster t1_jaapyk6 wrote on February 28, 2023 at 1:54 AM

Paying off a loan will rarely lower your credit score, and in the rare situations when it does the effect is very slight and temporary.

AmcillaSB t1_jaau4ly wrote on February 28, 2023 at 2:25 AM

That's generally not any bit true or accurate, however, it also might be a bit subjective based on your current credit score and history.

If you maintain a credit line like a car or home loan, and have an additional credit card or two, and pay them all off regularly without issue, you will likely maintain a high (800+ credit score) but if you close one of those lines of credit (like paying off a 5-year loan on a car) your credit score is going to drops, since you have less credit.

It will reach a new baseline. In most cases, that credit score change will be a reduced by 40-80 points. You'll likely still have an "excellent" credit score, but the numeric difference will be relatively significant.

If you were to take out a new, similar auto loan, and maintain your current spending habits, your credit score will return to about what it was previously, since you've opened up a new line of credit.

Closing lines of credit lowers your credit score. That's just how it works.

It's also why you never want to close a credit card account if you happen to get a card with a new issuer you like better, because ending that old line of credit (especially if it's a long-term account in good standing) will nuke your credit score, and it could take years to recover from. If you have a borderline score particularly, doing anything to lower that score 20-40 points for a few years could harm your chances of not only getting a good loan (banks are being really stingy atm) but also a good rate.

WendyArmbuster t1_jabbq3o wrote on February 28, 2023 at 4:50 AM

Equifax's website says:

>Paying off debt is more likely to help your credit scores than to hurt them. You are likely to see your credit scores improve after paying off debt unless the debt you repaid meets the unique criteria listed above.

The unique criteria listed above is indeed what you described:

>For example, paying off your only installment loan, such as an auto loan or mortgage, could negatively impact your credit scores by decreasing the diversity of your credit mix. Creditors like to see that you can responsibly manage different types of debt. Paying off your only line of installment credit reduces your credit mix and may ultimately decrease your credit scores.

To me that seems like a rare situation. Generally people with good credit have multiple lines of credit that they are managing at the same time. I have a mortgage that I pay, I pay my credit card off in full each month, and in the past I've had car payments that I've finished paying on. I have a hard time imagining that I could finish paying off my house and then my credit score would drop by enough that I couldn't get a used car loan. Debt free people are getting car loans. I'm sure of it.

whattheduce86 t1_jabaiw9 wrote on February 28, 2023 at 4:38 AM

Are you new to how credit works? I paid off my medical debt and went from having a 700+ score to no credit. The mortgage company recommended a quick credit card and got my score up to almost 800 in a week and was able to give me a mortgage.

LeeOblivious t1_jabbaiu wrote on February 28, 2023 at 4:46 AM

What you experienced was a closing of credit lines along with other factors. NOT a paying off of debt.

Prior to buying my home, I paid off my car, and credit cards. But I keep the line of credit open and still used the cards (just paid them off in full each month incurring no debt). I had no loss of credit score and was easily able to get financing.

As long as you have proper documented income and open lines of credit, you will have no issues getting financing.