Does it help your score paying off installment loans

Submitted by tammyyates on Sun, 10/04/2009 - 10:45

I have a high debt ratio, which makes my score 569, can a high debt ratio lower your score

Yes the more you utialize then the more it will have impact on yoru credit

Your credit score and report is based on the following

35% is based on payment history
30% Amount you owed
15% length of history
10% New credit
10% on types of credit

So as you cna see above the second most biggest factor which can affect is the amount you owe. The mroe the money the morerisker you are and if it is not backed by any asset,then the risk is higher and the imapct on yoru credit report

If you defulted anyhtign in the past the also has a majorimpact since such accoutns stay on yoru report for atleast 7 years and will reuce your score until they are gone out of yoru credit report

Sun, 10/04/2009 - 18:18 Permalink

HI Tammy,

A high debt ratio definitely lowers your score. Hence, you should try to lower the debt ratio. However, paying off installment loans does not really give a boost to your credit score. To be able to boost up your credit score you need to be regular on your open account payments, like credit cards.

Mon, 10/05/2009 - 07:32 Permalink

(Just putting my '2 cents' in, here) ....with an Installment Loan, you need to make timely payments on it, as well. If you are 30 days, 60 days late, etc. they can report this to the CB's. Just becareful you don't fall behind on the payments. The LESS your balance ( like any other loan) the more your credit score will rise.

Tue, 10/06/2009 - 10:54 Permalink