How Does Paying Off Mortgage Affect Credit Score? (2024)

Paying off your mortgage does not dramatically affect your credit score. You can get a sense of how much paying off your mortgage will impact your credit score in particular by using WalletHub’s free credit score simulator.

To be clear, though: You should always work to pay off any debt you owe as quickly as possible. Under no circ*mstances should you intentionally leave debt unpaid, thinking it will somehow help your credit score.

If you want to understand more about how paying off a mortgage impacts your credit score, the section below gives some specifics. By the way, the actual sale of your home will not impact your credit score at all. Credit scores are a calculation of how you use credit, not a measure of your assets.

Here’s how paying off a mortgage affects your credit score:

Less debt (positive impact). Your credit score will always benefit in the long-term when you pay off debt, so this is a positive outcome of paying off your mortgage.

Less varied credit mix (negative impact). Your credit mix is a measure of the variety of credit accounts on your credit report. Generally, the more variety you have, the more likely it is that lenders will view your credit profile favorably. Considering most people have only one mortgage on their file, paying it off will mean your credit mix has less variety.

However, it's worth repeating that this is not a reason for keeping a mortgage you don’t need. Responsible use of other types of credit (like credit cards) will easily make up for the lack of “credit diversity.”

Payment history (positive impact). A mortgage that’s paid in full will stay on your credit report for 10 years as a “closed account in good standing.” That’s 10 years that lenders can see your positive payment history.

These factors ultimately balance each other out, which is why you should not see much fluctuation in your score when you pay off your mortgage.