 TITLE: Will Paying Off a Loan Improve Credit? CONTENT: How Does Paying Off a Loan Affect Your Credit?\n----------------------------------------------\nPaying off a loan might not immediately improve your credit score; in fact, your score could drop or stay the same. A score drop could happen if the loan you paid off was the only loan on your credit report. That limits your credit mix, which accounts for 10% of your FICO® Score☉ . It's also possible your score could fall if your other credit accounts have higher balances than the paid-off loan.\nEven so, in general, getting rid of a loan is a win: You'll have more flexibility with your finances, and you'll no longer accrue interest charges on the loan's balance. So, if paying off a loan makes sense for you, avoiding a brief credit score drop shouldn't be a reason to keep the account open. Also, reducing debt will lower your debt-to-income ratio, which lenders will be glad to see if you seek out a new line of credit once the loan is paid off. END