 TITLE: Will Paying Off a Personal Loan Early Help My Credit? CONTENT: How Paying Off a Personal Loan Early Can Affect Your Credit\n-----------------------------------------------------------\nIf paying off your personal loan on time is good for your credit, shouldn't paying it off early be like extra credit? Unfortunately, it's not.\nPaying off your personal loan is also not like paying off your credit card—at least as far as your credit is concerned. If you monitor your credit regularly and have made a large payment to a credit card account, you may have seen your credit score take a nice little hop after the payment posted. That's because you reduced your credit utilization, or the amount of available credit you're using, on your established card account. Typically the lower your credit utilization, the better your credit scores.\nPaying off a personal loan is different. When you pay off an installment loan, your credit report shows the account as closed. When calculating your credit score, FICO weighs open accounts more heavily than closed accounts. Open accounts are considered a measure of how you're managing debt in the present as well as the past. Your successful payments on paid off loans are still part of your credit history, but they won't have the same impact on your score.\nWhen you added a personal loan to your credit history, you increased your number of active accounts and improved your credit mix with an installment loan. When you close the account, you will reverse the process: You will now have fewer open accounts and less account diversity. If you paid your loan off early, your history will reflect a shorter account relationship.\nThe same isn't true when you pay down your credit card. There, even if you pay your balance in full, the account remains open and your credit line stays intact. END