Does Paying Debt Off Early Affect My Credit Score?

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Credit scores are often a source of concern for people keeping a careful eye on their finances. Achieving a higher credit score can be a tough task – it can even seem impossible when you’re burdened with debt. It’s a great feeling when you’re nearing financial freedom, but you may be worried about what will happen to your credit score when your credit card debts are paid and those credit accounts are closed. Take a step back and think before making any huge financial decisions.

Credit Cards

Credit scores are not something you can easily calculate yourself; there are numerous factors that the major credit bureaus use to calculate your score. Part of maintaining a high credit score is making sure you make payments on time, every time – no exceptions. If you can’t make minimum payments, talk to New Era Debt Solutions about possible solutions.

Think for a moment about how you pay your credit cards. Are you the type of credit card holder that swipes away all month and then pays off the bill as soon as it arrives? This is fantastic if you can do it because you are using the benefits provided by the credit card company for free – things like air miles, purchase credits, etc. But if you can’t pay them in full every month try not to exceed 30% of your credit limit.

If you often come close to maxing out your available credit, then your credit score is going to be affected. Either make more purchases with cash/debit, or request a higher limit on your account. Take a look at your credit report if you’re still unsure of what the issue could be.


Now think about your student loans or personal loans. A significant portion of your credit score is determined by payment history. This means that paying anything off early demonstrates you’ve been making regular payments, but for less time. Your credit score can improve if you demonstrate that you’ve paid off your debts over a longer period of time while still paying on time, every time, of course. Open accounts that are regularly being paid off also indicate to creditors that you’re a reliable borrower.

Be Patient and Proactive

It’s important to remember that making minimum payments on your unsecured debt is going to take time. You also need to note that rebuilding your credit score is going to take some time. Patience is key during this stressful process, but you need to remain proactive in making smart financial decisions. Take a deep breath and stay on your path to financial freedom.

Please don’t hesitate to contact us if you need help getting free of debt. We’re always ready to listen with a free consultation.