Credit rating impact of paying off loan - now or later?

hipman

I have a Cahoot loan which I can now settle in full. I have recently missed two payments. Would it be best to settle now or make a few more payments on time (say 6 months worth) before settling to avoid having 'recent' missed payments on my credit record for the next few years (i.e until loan drops off credit record)? Interest rate only 5.4% so willing to take the hit if it helps my credit score longer-term.

Thanks!

paddyrg

I believe you should still pay it ASAP, the missed payments will not go away by paying more interest as far as I can see.

djsnakehipschris

Credit rating would go up because they would assess that you have less debt too.

Hax

Only thing is that Experian, for example, show the account activity from the last three years the account was open - thereby leaving the red marks visible well into the future (sometimes well passed six years if the account is closed later than the late payments!). I've no idea how much impact that has on credit applications. Maybe James from Experian can chip in here about this if he's reading

CallCredit on the other hand, hold the entirety of the payment history for up to six years - again, I don't know what creditors get to see or how much weight they'd put in a string of late payments at the end of an account closed four years ago.

I wouldn't think that two late payments on an account that has been settled a while ago would make much difference if the rest of the accounts are well maintained.