I only pay cash for cars and thought that not having a car loan might be hurting my credit. In 12-06 I get a "loan" check from Beneficial/ HFC for 7k at 26 % interest. I read the fine print and it clearly says "no penalty for pre-paymentâ?. I make a copy of the fine print and I cash the check and a week or so later pay off 6.5k of the 7k loan. I'm willing to pay $100 to $200 or so in interest to get a good trade line. Although when I login online it says "your next payment is due in Feb of 2008 or something like that, I only owe about $20 on the account. With credit cards I know that you do NOT want to close accounts especially if they are old. But on my credit report it shows that I have a monthly payment of like $230 and that the original loan was for 7k. Should I pay off the $20 and have the account closed, or keep it open with the $20 outstanding balance?
Is it an installment loan like most car loans? Or is this some type of line of credit? An installment loan is not something that gets closed, just paid off. If this is the case there's no reason not to pay the $20, because it will likely stay on your report for ten years (positive TL). If it's some type of revolving acct, I would just pay the $20 and leave it open.
I assume you are trying to jump-start your credit history. As long as the account is being reported, it has accomplished what it can toward that goal. Your next step is to progressively establish on-going open accounts. The opening balance for this loan, with little current balance, may help you get higher credit limit offers, if you were not already getting them. By the time this loan falls off (10 years), you should be well established, with a long positive payment history. If you have some mortgage payment history, combined with a number of old open revolving accounts, it probably matters little if you have any car or other installment loans.
I would just pay it off. I had a loan back in 1996 w/ Beneficial and it's still being reported as a positive on my CRs. Jenna
It is an unsecured loan. Duration is 60 months at $236, but I only owe about $20 and I have had it about 10 months.
I would pay it off, and make sure it is reporting correctly. It has served its purpose. Minimize risks of screw-ups, by others or by you. Keep your life simple. Pay it and close it.
