Will paying off an auto loan immediately after you open it speedily increase your credit score?
One customer in particular wanted to buy a car and had the cash to pay for it the spot. He was interested in increasing his low credit score, and wondered if it would boost his credit score if he paid it all at once. If that customer decided to buy a car with cash on the spot that auto loan would show up on his credit report as unrated.
So to make this simple, if you really want to help your credit rating, keep the auto loan open for at least 12 payments before you pay it off. When approving you for future loans lenders will look at your highest credit level and payment history; and several lenders require you having had an installment loan with at least 12 payments being paid as agreed.
You may pay a little bit of extra money in the long run with a slight interest rate, but if you're seeking to really increase your credit score and if you can afford it, stretch these payments out to at least 12 months.
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