February 18, 2008

Retiring Auto Loans Early

Filed under: Auto Loan

I have pretty good credit.  But I’d like to increase it as much as I can in the next 6-months since that’s when I plan to buy a house. 

I’m in the process of buying a car.  I can afford to pay cash, but have been told taking out a loan and paying it off will increase my score.  But in the short term, it appears taking out a car loan will in fact have the opposite effect. 

Is 6-months long enough for the anticipated increase in credit score to be seen? 

Thanks,
John 

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Hello John,

That’s a terrific means of skyrocketing your credit score and yes, six-months is not a problem because FICO has no memory.  Make sure the auto loan is not obtained through a finance company. 

Thanks for the questions and hope this helps.

Paul

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