I set up an installment account with Conn's to increase my credit score by having installment credit as well as revolving credit. I have paid 11 months on a 12 month installment. After I pay off the 12th month do I need to keep this account open by buying something else? I was told to never close any credit account as that hurts my score. Will the 12 month history be good enough or would it be better to buy something again to keep it open or does the account stay open after it is paid off. Joshua I would appreciate your comments as well as any one who can enlighten me.
Do you have other installment loans on your credit reports? If so, I would recommend making the last payment on this installment loan and just letting it close. Even if you don't have other installment loans, I would probably still just pay it off. It shouldn't have too much of a negative effect on your credit scores, if any at all. If this is actually a revolving credit account, then it will stay open on your credit reports with a zero balance. How are your FICO scores now after 12 months of making on-time payments?
Yes I have another CD secured installment loan at a credit union. I also have about $16,000 in revolving credit with only about $300 used on it. The loan I mentioned is definitely an installment, not revolving. If I pay off the installment will it remain open? if it closes how many points will it drop. My FICO is currently at 658
Your CU ratio, which only includes revolving credit, is great. Keep it that way and your FICO credit scores will continue to improve as you build more positive payment history. Once you pay off this installment loan, it will close, but it shouldn't effect your scores that much since you have another installment loan on your credit reports. If you didn't have another installment loan, paying it off and closing it could technically affect your credit mix. If you do see a slight drop, my guess is it won't be more than 5 points or so.
