Build credit or pay off loan?

Credit Report & Score Guide Forums Credit Building Forum Build credit or pay off loan?

Tagged: 

This topic contains 1 reply, has 2 voices, and was last updated by Tracy Winters Tracy Winters 4 months, 3 weeks ago.

Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • #16569

    Willis

    I have a car loan with 0% APR. I have no other debts, and no credit cards. I have enough money to pay the car loan off. What’s better – pay off the loan and be debt-free or continue payment to build credit?

    #16617
    Tracy Winters
    Tracy Winters
    Keymaster

    Continue Payments

    Usually, if you have the funds than it pays to pay-off loans. However, since you’re not paying interest on the loan you benefit nothing by paying it off (assuming you’re financially responsible and won’t blow off that money).

    Instead – invest the cash in something that pays interest, and continue to make timely payments on the loan. This should build you credit, which can further save you money on insurance rates, future loan terms etc. You will need to make at least 18-24 monthly payments for e decent credit score.

    I would also consider a credit card. Credit cards are a very cheap way to establish credit. If you pay the balance in full you never pay for interest, and so it cost you nothing to build good credit.

    Use the card for regular purchases like groceries or gas, wait for the statement, and pay the balance in full every month. This will build good payment history for you and will boost your score.





Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.

Posted in

Like Us!



Boost Your Credit

How to boost your credit, lower your debt-to-income ratio and get better termsHow to boost your credit, lower your debt-to-income ratio and get better terms!

myFICO ScoreWatch Free Trial

Get your FICO Score with Score Watch® today! Click here!


LifeLock Identity Theft Protection

Follow us