I know the credit score drop is minimal if you have good credit and will recover eventually, but it just occurred to me that perhaps there is a work around like updating the account or restructuring the loan for a new purpose (a new loan, but same account), just so it builds on itself instead of ending it. Is this a thing? I just discovered I have enough cash on hand to pay it off comfortably, but didn't know if that was the best option.
2 Answers
The credit score means nothing to anyone unless you intend to apply for a loan soon, and even then the score itself matters not but rather what bucket it falls in ("excellent", "good" etc). If paying off a loan downs you a bucket I'd be surprised. In any case, reusing the same account for a different loan is highly unlikely, but you'd probably want to check with the lender since they're the only ones who can answer that.
My suggestion is that if you can save more by paying off the loan than by investing the cash on hand - pay off the loan. Credit score should not be a consideration unless you intend to apply for a mortgage in the next couple of months (but even then you would probably either want to keep the cash for down-payment or reduce the monthly payments for a larger loan, instead of optimizing for credit score).
answered Oct 2, 2022 at 22:24
Even though you have paid off the loan it stays on your credit report as paid as agreed and thus paying it off isn't going to be a big deal.
answered Oct 3, 2022 at 2:23
