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But the person in question here already has a credit history.

Ah, but you previously wrote:

Not really. The only thing that hurts you is being late or not paying. A zero score is just as good as an 800 score. It means you have stayed out of debt.

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:

But, you don't want to close all your credit accounts. That will hurt you later when you apply for new credit (mortgage, car loan, etc.)

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)!!!