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And if you follow this theory, paying a loan off early might sound like an excellent strategy for building your credit score.
Unfortunately, paying off non-credit card debt early may actually make you less credit-worthy, according to scoring models.
Fact: Even with an assisted debt management program through credit counseling, your credit score may improve.
So it’s important to note that your creditors may report that you’ve missed a payment on your credit reports in the first month your plan starts.There are a couple of ways that paying off an installment loan affects your credit score.The number of accounts you have that have balances is one factor in how your credit score is calculated.Installment loan accounts affect your credit score differently.An installment loan is a loan with a set number of scheduled payments spread over a pre-defined period of time.