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I’ve heard that having vehicle financing is good for your credit score. Is that true?
From the books I’ve read and the research I’ve done online, they almost all say that it is a good idea to pay off vehicle financing, since it is relatively high interest debt. Assuming that one doesn’t have any credit card debt, vehicle loans are usually the next highest, so it would be logical to pay it off.
However, I heard from a particularly wealthy person that having vehicle financing for a short period of time is good. He said that he used to always pay cash to get a new car, so as to avoid paying the interest. Eventually, he saw a hit on his credit report that said, “No vehicle financing in the last seven years.†He said that what he does now is finance the vehicle for a year, then pays it off, in order to help his credit score.
I trust the guy who told me that, but everything else seems to say otherwise. Can anyone confirm that this is true or false?
Thanks for the info.
From the books I’ve read and the research I’ve done online, they almost all say that it is a good idea to pay off vehicle financing, since it is relatively high interest debt. Assuming that one doesn’t have any credit card debt, vehicle loans are usually the next highest, so it would be logical to pay it off.
However, I heard from a particularly wealthy person that having vehicle financing for a short period of time is good. He said that he used to always pay cash to get a new car, so as to avoid paying the interest. Eventually, he saw a hit on his credit report that said, “No vehicle financing in the last seven years.†He said that what he does now is finance the vehicle for a year, then pays it off, in order to help his credit score.
I trust the guy who told me that, but everything else seems to say otherwise. Can anyone confirm that this is true or false?
Thanks for the info.
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