Hello all, I will try to keep this post short. I have a truck that is financed and the payoff on it is about $2,400.00 now. It is current and I have never been late with the payment a single time in the life of the loan. I have 13 more payments to pay on the loan and it will be paid off. I will be receiving about $2,500.00 from a lawsuit settlement in the next few weeks. My question is this: Is it better for my overall credit rating to continue paying off the loan through the term of the loan as scheduled? I would like to pay off the truck with the lawsuit settlement proceeds and not owe any money at all, other than my basic ordinary living expenses-rent, electricity, phone, food, etc. However, I am wondering if paying the monthly payments each month for the next 13 months will help improve my credit rating. My credit is not very good now, I have a chapter 7 BK on my record filed earlier this year. I reaffirmed the debt and kept making my truck payments on time. I did open an Orchard Bank MC with a $300.00 limit last month, I paid the $39.00 startup fee right away and have used it once for dinner last Sunday and already paid that charge off too. I plan to use the card once or twice a month for dinner or gasoline and pay it off right away as soon as the charges post to my account. I am trying to rebuild my credit, and wonder just how much it would help my credit to continue paying my truck loan, or is it better to maintain this Orchard account in good standing? I count myself very lucky to still have a decent-paying full time job right now but due to the economy and the possibility of layoffs and not much job availability where I live, I know I would sleep better and feel better if my truck was paid for. If paying the truck payments on time for the next year doesn't really do much to help my credit, I would rather pay it off. I appreciate any help you can offer. Thanks.
If your goal is to rebuild your credit, I recommend continuing to pay the auto loan as it is for the next 13 months. It won't really cost you that much more in interest over the 13 months, and it will do A LOT to help establish your payment history again and improve your FICO scores. Set the $2,500 bucks aside in an online savings account and then just set up automatic payments to make sure you always pay the bill on time.
