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You are here: Home / Our Tips / Does Paying off a Mortgage Affect My Credit Score?
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Does Paying off a Mortgage Affect My Credit Score?

October 27, 2020 By Ralph Gates

Paying on a mortgage is something no one is exactly excited to do. However, what can be exciting is to finally pay off that mortgage fully. If this is you right now or has been, congratulations! That is a big accomplishment to celebrate. 

But, before you pay off that mortgage, there are some things to take into consideration, like how it will affect your credit score. If this is something that worries you or you have questions on, don’t fret! Here’s what you need to know. 

The Connection Between Your Mortgage and Credit Score 

There really isn’t anything like a home mortgage to help or hurt your credit score. An important thing to know is that home mortgage loans are reported to all three credit bureaus on a monthly basis. Simply put, your mortgage can really increase your credit score as long as you’re making consistent payments on time.

When you pay your mortgage off in full, it gets reported back to the loan servicer which ceases any on-going credit benefits. Paying off your mortgage in full doesn’t directly hurt your credit score per say. Just make sure the rest of your accounts are paid in a timely fashion. 

How Credit Plays a Role 

Let’s say you’ve paid off your mortgage and still have derogatory items (collections or late payments) these things will continue to get reported for about seven years or so. This could potentially hurt your credit score down the road. A mortgage payment holds a great deal of power, and without it your other credit accounts take that main spot. If possible, we recommend paying off the mortgage when you’ve done everything else to maintain a healthy credit score. This means that when the mortgage is paid off, your credit score is at a lesser risk for a negative impact. 

Loan Types 

As we all know, there are different types of loans. These types of loans; conventional, VA, FHA and USDA do not affect your credit score. All of these available loan programs report the same way to credit agencies. However, there are some exceptions – if you’ve had a loan modification in the past, you’ll most likely see that your servicer is going to report “restructured mortgage” which could ultimately hurt your score. It could also come off as making you less creditworthy for future mortgages.

If you are prepaying your mortgage or thinking about it in an attempt to pay it off sooner, you’ll want to continue doing so, especially if you have 10 years or more left on your term. If you’re in a situation where your credit needs remediation, 10 years is still enough time to get your other credits in order.  

How Big Events Affect Your Credit 

It’s extremely important to know these four events and what they can do to your credit score: 

  • Foreclosure
  • Short Sale
  • Deed In Lieu
  • Bankruptcy

Any of these four events can remain on your credit report and affect your credit score. If you have a mortgage and the rest of your credit history is not so great, it’s important to remember that making consistent and on time payments can help offset other poor credit factors. 

Do You Have More Credit Score Related Questions? Let Mid America Mortgage Help!

We understand that navigating your credit score with a mortgage can be a bit confusing, so we want to ensure we make the process as easy as can be. Check out our other credit score related blogs like, How Many Credit Cards Are Bad For Your Credit Score and What Do Retail Credit Cards Do To Your Credit Score? 

Always feel free to give us a call at (573)-875-1100 and we’ll be happy to discuss any mortgage related questions you have! 

Filed Under: Our Tips

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Mid America Mortgage Services, Inc, NMLS #1142067
200 E Walnut St.
Columbia, MO 65203

Phone: (573) 875-1100

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"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John

Michelle, I want to thank you for all of your efforts on the loan. I never knew how much information the needed! I appreciate your personal nature and ease of working together. Thank you for making this happen! :)

Amy

"My family owns Tiger Ice Company. My experience with Ralph at Mid America started with Tiger Ice because we needed to expand our facility. When we went in to talk to Ralph at Mid America, he pretty much was straight up with us and told us we needed to go back to the drawing board. We came back with new numbers and a new plan, and we built the facility and everything was fine. Our dream of that would not have been possible at all without Mid America Mortgage Services, Inc and Ralph. They don’t tell you what you want to hear, they tell you the truth and that's what we weren't getting from other banks."

Andy

"I knew Jeanie Byland for a long time. She made the process so easy. One of the things I probably appreciated the most was that she didn't want to spoil the excitement of closing on a new house by showing up on closing day finding out that we owe a lot more than we thought. They were upfront with that information right from the get-go, and that’s because it’s just like they say, ‘They wouldn’t put you in a loan that they would be comfortable taking themselves.’”

Jamie

"I’m a very loyal customer at Mid America Mortgage Services, Inc. I have an addiction to building houses and designing them, and they are always right there with me every step of the way helping me get the best loan product and the best rates whenever I am ready to build. They make sure you don’t get a loan that you can’t afford. The whole process was very smooth. I would recommend Mid America Mortgage Services, Inc to anyone because they are always there to teach you, help you, and make it easy for you every step of the way."

Kate

"They really explained the process to us very well and made us feel very comfortable, specifically Jeanie Byland. I have never asked a question that I felt dumb about. They really wanted to educate us and have been fantastic. The interest rates changed one day and they called me to say, ‘Hey we might ought to look into refinancing your loan’. I really felt like they had our best interest at heart."

Steve

"When we were 18 and 19 years old no one wanted to help us get started. But Michelle took us under her wing 6 years ago next month. There is a lot of people out there that could of taken advantage of us many of times because we had no idea what was going on. For Michelle to stand beside us and walk us through, and not let us get into something that could get us in a lot of trouble means the world. We thank Michelle and we are extremely blessed to be able to work with her and her team. I have never even thought about talking to another lender and will always be loyal to Mid America Mortgage Services, Inc."

Cody and Morgan

"One of the main things that I loved about Michelle was she was so organized. She would meet us at any location she needed to, and to be honest she had the absolute lowest interest rate. They were always very transparent with fees so there were no surprises. Michelle was always super easy and we would always run in talk to her even it was for a few minutes. The best thing was the process was very, very smooth."

Chris and Jamie

"My wife and I have moved around quite a bit with my job so we have been through the process before, but we have never had anybody help us as much as Michelle West Mid America Mortgage Services, Inc did. We needed a loan for a new construction home and they were able to help us out with all of our needs and make us feel comfortable with what we were doing moving forward. They did a good job of walking us through the paperwork to make sure that we were pre-approved for a certain amount."

Jason

Selling our home of 17 years and building a new home was a very emotional time for our family. We were ready for the next adventure in our lives but knew there were numerous steps involved. The search for a mortgage officer was simple, Michelle was our choice. Her guidance and knowledge made the process as easy as possible. When we had questions, she was always there to give us an answer and discuss our options. The employees of Mid America Mortgage Services, Inc like Michelle will keep us returning for our mortgage needs.

Chad and Julee


Phone: (573) 875-1100
200 E Walnut St, Columbia, MO 65203

 

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