Would taking out a loan and paying it off immediatly help my credit score? Please read?

I am attending a community college, and I have enough money saved up that I do not NEED to take out a loan. However, I am trying to build up my credit score so that I can take out a larger loan later when I transfer to a 20k/year university. Would taking out a of about 3k, and paying it off immediatly help my credit score? Or possibly taking out a loan and making payments on it? What is the best way to go about this? Thank you very much for your help!

Public Comments

1. You want to take out a loan and pay it off in the time you took it out for. Paying it off early does not help your credit. Getting a credit card and using it a few times also helps (just pay off the amount you owe as soon as you get the bill and don't pay any interest).
2. Taking out a student loan and paying it off immediately is not a good idea. Depending, also, on what type of loan it is; however, student loans typically "punish" you by paying it off immediately. You get charged a certain percentage if you pay the loan off immediately. If I were you, I would wait until I go to the 20K-University. Most likely, about 90 - 99% of the time, you will qualify for a student loan. That's why it's called Financial Aid because it's so easy to get a loan.
3. Well building up any kind of credit history can help, but lot of the score is about a history of using credit not as much about a single event. For instance if you could get a credit card (real one, not a secured one) and then use it for every day expenses, but pay it off every month (and do pay off!) that would probably do more for your credit then one $3000 loan where you pay it off right away. Also be aware that if what it will really cost you to pay off the $3000, like fees or if they compound monthly so you owe one month interest, ...