How Soon After Paying Off a Mortgage Should Your Credit Score Increase?

It takes a few months to update your credit report after a payoff.

It takes a few months to update your credit report after a payoff.

Paying off your mortgage note is an exciting time for a young couple. It signifies total ownership of your home and a reduction in your monthly expenses. Signing the payoff check might be a personal milestone, but it does not do much for your credit score. You could see a slight increase in your credit score but nothing significant. Paying on an active account does more for your credit score than paying it off.

Time Frame

Most lenders report your monthly payments to the credit reporting bureaus on a monthly basis. Depending on when you make your last payment, it could take between one to three months for your lender to close the account on your credit report. Your credit score increase -- if any -- shows when the lender updates the account.

Installment Loans

Mortgage loans are installment loans in which you borrow a specified amount of money and pay it back over an agreed-upon term plus interest. According to credit reporting agency Experian, paying off an installment loan early does not significantly affect your credit score. Any increase in your credit score is directly attributed to a lower debt ratio. When you pay off a debt, your utilization ratio drops and your credit score increases.

Closed Accounts

Active accounts are scored higher than closed accounts, says Experian. Even though you pay off the account, you continue to reap some benefits from the credit line. Positive accounts stay on your credit report for 10 years from the date you closed the account. Having this positive trade line shows a history of good payment and looks good on future credit applications.


Even paying off your mortgage doesn't bring a great increase in your credit score, it has other benefits. Without a mortgage payment, you increase your financial reserves and savings accounts. You free up a significant amount of money that can go toward other personal and financial goals each month. Continue to pay your other credit accounts as agreed, and your credit score will increase.


About the Author

Leigh Thompson began writing in 2007 and specializes in creating content for websites. She has been published online in various capacities. Thompson has an associate degree in information technology from the University of Kansas and is working on a bachelor's degree in business and personal finance.

Photo Credits

  • Jupiterimages/Polka Dot/Getty Images