What happens to my credit score when I pay off personal loan

Quick And Easy Personal
Loans Up To $2500

By CreditNinja
Modified on June 18, 2023

Paying off a personal loan can raise or lower your credit score, depending on your current financial situation and more importantly, your credit mix. Your credit mix is how many different types of credit and loan products you have. This is one factor that affects your credit score, and having a more diverse credit mix is a positive thing according to the credit bureaus. 

Paying off any loan is a good thing. It means you met your financial obligation, fulfilled the contract with the lender, and lowered your overall debt load. These are all great accomplishments on your financial journey. Unfortunately, credit scores can be very precarious things that raise and lower frequently. And sometimes paying off a loan can actually lower your credit score. 

If paying off a loan gets rid of a specific type of credit product from your credit mix it can negatively impact your score. This is because having many different types of credit or loans is seen as having a diverse credit mix, which raises your credit score. So if you remove one of those, and it was the only one of that type on your credit report, then your score may temporarily lower. 

But even if your score does drop a small amount due to a less diverse credit mix, it’s still a great achievement to pay off a personal loan. And if paying it off lowers your overall debt, helps you avoid future interest charges and other fees, and simplifies your budgeting and finances, then it’s still worth it. You should never keep a loan open longer than you need to for fear of a slight drop in your credit score. 

It’s important to monitor your credit score and keep track of your overall financial situation. But keep in mind that your score will fluctuate over time. It may go up for a while, and then drop slightly here and there. Unless the drop is significant, rest assured that continuing to pay your bills and loans on time and practicing smart budgeting and financial planning will keep your score where it needs to be in the long run.

Credit Education & Credit Reporting
Does a secured loan hurt your credit?
Can you get a secured loan with a 500 credit score?
What credit score is needed for a 100k personal loan
How many points does a loan affect credit score
Can I get a loan with a 480 credit score
Do personal loans affect credit score
What is a good interest rate on a personal loan
Can you get a personal loan without a job
How long does it take to get a personal loan from a credit union
Can I get a tax advance if I already filed
How do I write a simple personal loan agreement
What’s the easiest loan to get with bad credit
What are the advantages of payday loans
How long do payday loans stay on credit report
What is considered bad credit
How do you determine credit worthiness
How to get a cash loan with bad credit
Which loan company is best for bad credit
Why does a hard inquiry hurt your credit
What is a soft credit check
What is a hard credit inquiry
Who will give loans with bad credit
What is considered a decent credit score
On average how much of a personal loan can you get with an 850 credit score
How to get a personal loan with a thin file credit score
How can I get a personal loan with 690 credit score
What personal loan rate should I expect with 746 credit score
How can I get approved for a personal loan with a 630 credit score
My credit score is 736 what is the most I can get for a personal loan
What credit score is needed for a personal bank loan
What are personal loan rates if I have a 780 credit score
Can I get a personal loan with a 635 credit score?
How much can I get in a personal loan with a 640 credit score
Where can I get a personal loan with a 513 credit score
Where can I get an unsecured personal loan with a 500 credit score and a co-signer
What are the chances of getting a personal loan with a 648 credit score
How much of a personal loan can I get with a credit score of 480
How much of a personal loan can I get with a credit score of 750
Which is better credit card refinancing loan or debt consolidation loan
How to report credit card debt consolidation loan on taxes
If 700 credit score which is better debt consolidation loan or credit card
How would a credit card consolidation loan affect credit score
What is the difference between a debt consolidation loan and a credit card consolidation loan
How will consolidating credit cards with personal loan affect credit score
Can you get a personal loan with a credit score of 550
How big of a personal bank loan can you get with a credit score of 600
How does moving credit card debt to personal loan impact your credit score
What happens to my credit score when I pay off personal loan
Where can you get a personal loan with a 435 credit score
Is it bad to check your credit score
What does my credit score need to be to get a personal auto loan
How to get a personal loan with a 500 credit score
What does your credit score have to be to get a personal loan
What Credit Score Is Needed For a Personal Loan
How does a personal loan affect credit score

Quick And Easy Personal Loans Up To $2500*