I moved to the US fairly recently an dmy credit score is at around 780 (through credit card payments and auto loan). I've saved enough to pay my car in full now. Should I pay the car in full and save some money? Are my credit card payments on time enough to keep building my score? Or do I need to keep my auto loan? Thanks!
No, pay off the car. You don't need to be paying interest to build credit.
Do u need to borrow money in recent future for something? No, just pay in cash (though some new cars come with v v low interest 0-0.9%) If u want loan for something soon , then diversity of accounts help (but only v little)
Save more money. I came to US 4 years ago and paid my car fully in cash. My fico is above 810 now.
What do you do to build it?
Nothing very special. I have 4 credit cards and mostly use 1 of them. Always pay off in full before the due date. In my US life, I missed only one payment of less then $10 when I forgot setting an auto payment for the new card.
First off, considering the current way of the world -maybe hold on to the money for a while? You should always focus on having proper savings before paying debt. And as a heads up, your score will decrease if you pay off your loan. Part of that credit score is different types of credit. Now if you are at 780, I don’t know how much it’ll drop but you’ll still be above 700. Unless it’s hurting you badly from a massive interest rate, why not just leave it? Keep the money getting saved, and you could even invest if need be.
I really don't want debt if I can avoid it. I underhand your point though and it's a very valid one. I'll have to think about that. Regarding the credit score dropping, will it keep increasing with the credit card? Seems ridiculous I need to have a loan ongoing to prove I am good with my finances...
Welcome to the credit system, it’s a nice method to keep suckering you into taking on debt. Lemme clarify, you can definitely continue just sticking with credit cards and I think your score should be fine. There are lots of factors, and it’s hard to put a blanket on all of it. I don’t know if it’ll keep increasing much in all honesty. I’m a little bit in the same boat as I paid off my loan a couple months ago and it dropped my score a bit. I’m trying to use the self loan to see if it can supplement for a regular loan so I don’t have to take out some absurd loan just for a credit score. May be a good option here but I’ll defer to others.
Let's talk real numbers. Assumptions (since I couldn't find your details in the post): You bought your car for 35K Put 5K down payment Got a loan with 2% interest rate over 5 years. You have 3 more years remaining on your loan. So essentially you still have to pay 360$ in interest. So the real question is, what are you going to do with those 360$? Instead, if you invest the remaining amount due in stocks will you earn more? TLDR: If you invest wisely, it might not be worth paying the loan off.
That's actually a great point! Thanks!
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Credit score doesn't matter above 700
False.
They don’t matter above 760 if you need a mortgage.