Unstable Balance, 1930 by Wassily Kandinsky
Yes...but also, no.
The facts: The short answer is: it depends on the type of debt you pay off. Paying off credit card debt can help raise your credit score. However, paying off installment debt — debt that must be repaid in full over a specified amount of time — doesn't improve your credit score. One super common example of installment debt = a car loan.
We tend to pay off installment loans sooner because we think that’s going to increase our score. We think, 'I borrowed money for a car loan for 16 months but I paid it off in eight months.' That is not improving your credit score. It’s not a good [money management] clue for lenders. Paying off an installment loan early just means you had the money to do it.
Yes...but also, no.
The facts: The short answer is: it depends on the type of debt you pay off. Paying off credit card debt can help raise your credit score. However, paying off installment debt — debt that must be repaid in full over a specified amount of time — doesn't improve your credit score. One super common example of installment debt = a car loan.
We tend to pay off installment loans sooner because we think that’s going to increase our score. We think, 'I borrowed money for a car loan for 16 months but I paid it off in eight months.' That is not improving your credit score. It’s not a good [money management] clue for lenders. Paying off an installment loan early just means you had the money to do it.
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Share your story - because, in the end, there will always be story or two to tell. About being broken. Rising. Falling. Growing. Disappearing. Waiting. Surviving. Changing. And other human fears.
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Share your story - because, in the end, there will always be story or two to tell. About being broken. Rising. Falling. Growing. Disappearing. Waiting. Surviving. Changing. And other human fears.
Submit a Story