As long as the loan agreement does not include any penalties for early repayment – this can be safely done and thanks to that you can save money by eliminating interest rates for the period of the loan. If payments have always been made well in advance, your account will still have a positive impact on your credit history, even after it has been paid and closed.
Car loan maintenance can help you improve your credit scores
However, open accounts can have a greater impact on credit performance than closed accounts. Open accounts show how you currently manage your credit, not just how it was in the past. If you are still trying to get a better loan, it may be better to leave the car loan for some time, at least until you have the opportunity to open another account or two.
For example, if you don’t have a credit card yet, consider applying for a loan before paying back your loan. Installment loans have fixed loan amounts and set monthly payments, but with a credit card you can specify how much you spend and how much you will pay monthly.
For this reason, credit cards are considered to be particularly good indicators of the ability to manage your credit and debt. This does not mean that you should go to apply for multiple credit cards. You only need one or two.
Using a credit card to establish a loan
As long as you make all payments on time, your credit card can help you establish a loan and increase your credit points slightly faster than the installment bill. Although you can transfer balances from month to month, you don’t have to. Completing your credit card balance every month means you avoid paying interest on purchases, which is good for you and your credit history. It also helps to keep credit usage low, which is great for credit scores.
Learn more about setting the loan to be able to use the conditions as fully and as much as possible. If you have paid the debt and the account has not been updated to reflect the payment in the credit report, you should contact the credit company to dispute this information. You can also do it online, by phone or by post. Learn more about how to resolve disputes about credit report information by contacting this way. If the debt was due to a billing error, you can also contact the company directly.