PriceProtect™
DriveShield™
GarageGuard™
Services
Insurance
Car Insurance
Compare Car Insurance with Jerry
Jerry’s Expert Advice
Car Insurance Estimates
Home & Renters Insurance
Renters Insurance
Repairs
Car Repair Estimates
Repair Estimates for Popular Services
Advice
Read Car Content
Browse Jerry Car Advice
Check Out Expert Car QnA
Learn About How We Create Content
Jerry Data & Research
Does paying off a car loan early hurt my credit score?
When is it a bad idea to pay off a car loan early? I’m trying to improve my credit to qualify for a mortgage. Since I don’t have a lot of credit accounts, will paying off my car loan early hurt my credit score?
Phoebe Mah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Great question. While paying off a car loan can relieve you of financial stress, paying it off early could potentially lower your credit score.
Lenders and credit bureaus look at several factors:
- Amount of credit
- Debt-to-income ratio
- Type of credit or credit mix
- Age of oldest credit account
- Credit score
Since you don’t have a wide mix of credit or accounts, paying off your car loan will reduce the available credit you have, along with the length of time your account has been open. As these are two major factors in determining credit scores and creditworthiness, you may reduce your chances of being seen as a worthy borrower.
That said, you can still improve your credit score without paying off your car loan. You can do this by:
- Making on-time payments.
- Lowering your debt-to-income ratio.
- Opening a different type of credit account, like a credit card or loan.
- Check your credit reports often.
- Ask for a balance increase if a credit card is in good standing.
Since you are taking time to learn if paying off a car loan is the right decision for you, consider taking the time to save on your car insurance with
Jerry
. Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away!
View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
Join 4M+ members in lowering their car insurance
You Might Also Be Interested
Read Advice From Car Experts At Jerry
What Others Are Asking
Browse More Content
Insurance in Your State
Easiest way to compare and buy car insurance
No long forms
No spam or unwanted phone calls
Quotes from top insurance companies