“no credit history”
But the person in question here already has a credit history.
Ah, but you previously wrote:
I was responding to that comment, and corrected you. But, if you want to talk about this particular person, let's go back to what I originally wrote:
If you close all your credit accounts, you will still have some credit history, but not recent history. And after 7 years, it will disappear altogether. This isn't an option for this particular person, since she still owes $20,000. But, it's still good advice: once you have established credit, you want to maintain it.
Closing accounts prematurely will also hurt you in another way: it will reduce your available credit, and increase your credit utilization. An example: you have two credit cards, each with a $10,000 credit limit. You have a $9,000 balance on one of them, but the other is paid off. If you close the account with a zero balance, your credit utilization will jump from 45% to 90%. That's an exaggerated case, but 90% utilization of revolving credit is considered "maxed out", and will significantly lower your credit score.
Your credit score has a number of components: credit utilization, length of credit history, timeliness, etc. Late payments in the past 24 months have a big (and perhaps the biggest) effect, but your credit score can vary quite a bit even if your credit is "perfect". And while you may be able to get a loan with little or no history, it will substantially increase your finance rate.
I showed my daughter how much her monthly payments would be with a ideal credit score (i.e. 750+) versus little or no credit. She now understands how important it is.
BTW, I haven't financed a car in nearly 30 years. Since then, I've paid cash each time. And when I applied for credit recently, my credit score was lowered because I had no recent car loans (despite credit cards that are 35 years old, and a mortgage recently paid in full)!!!