kupicoo / E+ via Getty Images
(kupicoo / E+ via Getty Images)
Quick Read
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Continuing to make the final $1,000 payments on a young borrower’s car loan builds more payment history (35% of FICO score) and maintains the installment loan account that diversifies her credit mix, preventing a premature loss of points if paid off early.
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Paying off the loan early removes the primary credit-building benefit for a young borrower with limited history, while the remaining $1,000 balance has negligible financial impact on the parents’ debt-free status or the daughter’s finances.
A debt-free dad in Wisconsin called Clark Howard with a problem most parents would envy: his daughter has been faithfully paying down a $3,000 car loan for two years, the…